Revisor’s notes. —

The provisions of this title were redrafted in 1986 to remove personal pronouns pursuant to § 4, ch. 58, SLA 1982 and in 1986, 1994, 2006, and 2014 to make other, minor word changes. In 1980, the provisions of the Uniform Commercial Code formerly set out in AS 45.05, were renumbered as AS 45.01 — AS 45.09 so that the numbering now corresponds to the numbering of the official text of the Uniform Commercial Code. To determine the disposition of sections formerly numbered within AS 45.05, or to determine the prior numbering of sections now numbered within AS 45.01 — AS 45.09, see the Table of Sections Amended, Etc., in Volume 11.

Collateral references. —

Theodore Eisenberg, Debtor-Creditor Law (Matthew Bender).

Peter J. Bestos, Modern UCC Litigation Forms (Matthew Bender).

Duesenberg and King, Sales and Bulk Transfers Under the UCC (Matthew Bender).

Cohen, McLaughlin, and Zaretsky, Commercial Law Report (Matthew Bender).

Frederick M. Hart, Forms and Procedures Under the UCC (Matthew Bender).

Willer and Hart, UCC Reporter-Digest (Matthew Bender).

Zaretsky, McLaughlin, Commercial Law and Practice Guide (Matthew Bender).

Charles L. Knapp, Commercial Damages: A Guide to Remedies in Business Litigation (Matthew Bender).

Charles K. Knapp, Commercial Damages Reporter (Matthew Bender).

Howard Ruda, Asset Based Financing: A Transactional Guide (Matthew Bender).

Chapter 01. General Provisions.

Revisor’s notes. —

Formerly AS 45.05.002 — 45.05.034. Renumbered in 1980. To determine the former number of a particular section, see the Table of Sections Amended in volume 11.

Cross references. —

For inapplicability of the amendments made to this chapter by ch. 35, SLA 1993, to rights and obligations arising under this chapter before January 1, 1994, see § 129(a), ch. 35, SLA 1993 in the Temporary and Special Acts; see also AS 01.10.100 .

Editor’s notes. —

Section 115(a), ch. 44, SLA 2009, provides that the amendments made by ch. 44, SLA 2009, apply “to a document of title that is issued or a bailment that arises on or after January 1, 2010” and do “not apply to a document of title that is issued or a bailment that arises before January 1, 2010 even if the document of title or bailment would be subject to [ch. 44, SLA 2009] if the document of title was issued or the bailment arose on or after January 1, 2010.” Section 115(b), ch. 44, SLA 2009 provides that ch. 44, SLA 2009, “does not apply to a right of action that has accrued before January 1, 2010.” Section 116, ch. 44, SLA 2009, provides that “A document of title issued or a bailment that arises before January 1, 2010 and the rights, obligations, and interests flowing from that document or bailment are governed by a statute amended or repealed by [ch. 44, SLA 2009] as if the amendment or repeal had not occurred and may be terminated, completed, consummated, or enforced under that statute.”

Legislative history reports. —

For legislative committee report on original bill, see 1962 House Journal, pages 277 — 285.

Article 1. Short Title, Construction, Application, and Subject Matter of Act.

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.

Notes to Decisions

Code must be regarded as supreme. —

Where both the code and general principles are available, the former should always be considered and applied if applicable. By legislative declaration, the code is the law, and if general principles appear inconsistent, they must be considered displaced under this section. Moreover, even where inconsistency does not exist, the code must be regarded as supreme; general principles, even when consistent with the code, are merely supplementary. Prince v. Le Van, 486 P.2d 959 (Alaska 1971).

Where specific code provisions are available to deal with a case, they should be applied. Kelly v. Miller, 575 P.2d 1221 (Alaska 1978).

The principles of contract law continue under the code. Prince v. Le Van, 486 P.2d 959 (Alaska 1971).

The code does not cover every aspect of contract law and where a situation arises that calls for application of legal or equitable principles not displaced by code provisions, courts are free to use these supplemental principles. Kelly v. Miller, 575 P.2d 1221 (Alaska 1978).

But such principles do not displace code. —

Under this section the principles of equity, including mistake, misrepresentation, and other invalidating grounds “supplement” the code provisions and apply “unless displaced by the particular provision of this chapter.” It appears then, that general principles of contract law remain in effect to some extent under the code. Nevertheless, even when general principles remain operative, they merely supplement the code; they do not displace it so as to exclude application of its specific provisions where relevant. Prince v. Le Van, 486 P.2d 959 (Alaska 1971).

The code does not preclude the common-law remedy of reformation for mutual mistake, to which the parol evidence rule is not applicable. Braund, Inc. v. White, 486 P.2d 50 (Alaska 1971), overruled in part, Christensen v. Alaska Sales & Serv., 335 P.3d 514 (Alaska 2014).

The code does not preclude the remedy of reformation. Kupka v. Morey, 541 P.2d 740 (Alaska 1975).

Applied in

A & G Constr. Co. v. Reid Bros. Logging Co., 547 P.2d 1207 (Alaska 1976); Alaska State Bank v. General Ins. Co., 579 P.2d 1362 (Alaska 1978); State v. McKinnon, 667 P.2d 1239 (Alaska 1983).

Cited in

Alaska Airlines, Inc. v. Lockheed Aircraft Corp., 430 F. Supp. 134 (D. Alaska 1977).

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.

Article 2. General Definitions and Principles of Interpretation.

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).

Notes to Decisions

A determination of whether a depositary has acted in good faith involves a subjective inquiry as to whether the bank extended credit on a check having knowledge of facts suggesting that the check would eventually be dishonored. Frantz v. First Nat'l Bank, 584 P.2d 1125 (Alaska 1978).

Draftsmen of the Uniform Commercial Code expressly rejected the idea of including a concept of objective commercial reasonableness within the meaning of good faith. Frantz v. First Nat'l Bank, 584 P.2d 1125 (Alaska 1978).

Mere knowledge of a pre-existing unperfected security interest by a subsequent security interest holder cannot itself be bad faith, for that would defeat the operation of the “pure race” recording system of the U.C.C. Division of Agric. v. Fowler, 611 P.2d 58 (Alaska 1980).

Extension of immediate credit on check. —

Absent subjective knowledge that the payor would not honor the check he wrote, the extension of immediate credit on a check does not manifest bad faith. Frantz v. First Nat'l Bank, 584 P.2d 1125 (Alaska 1978).

Tests to determine notice of a defense. —

Subjective and objective tests are used to determine whether a depositary had notice of a defense to a check, i.e., whether it knew or should have known of a defense against a particular instrument at the time it was negotiated for value. Frantz v. First Nat'l Bank, 584 P.2d 1125 (Alaska 1978).

A bank’s awareness of a depositor’s overdrafts or rumored plans to depart is not probative, because knowledge of a depositor’s financial problems does not impart notice of a defense to a check issued to him by a third party. Frantz v. First Nat'l Bank, 584 P.2d 1125 (Alaska 1978).

No affirmative duty to inquire. —

Absent actual knowledge or reason to know, a bank has no affirmative duty to inquire whether a defense exists. Frantz v. First Nat'l Bank, 584 P.2d 1125 (Alaska 1978).

“Security interest.” —

A motor vehicle dealer’s interest under a retail installment contract was a “security interest.” Decker v. Aurora Motors, 409 P.2d 603 (Alaska 1966).

Liquor license could qualify as a security interest under Alaska’s codification of Article 9 of the Uniform Commercial Code. Queen of the N., Inc. v. LeGrue, 582 P.2d 144 (Alaska 1978).

Surety’s right to earned progress payments does not qualify as an interest in personal property subject to the filing provisions of the code since the surety has the right to complete the job it has bonded and apply any earned funds against its costs. This does not secure the payment or performance of an obligation as a “security interest” as that term is defined in this section. Alaska State Bank v. General Ins. Co., 579 P.2d 1362 (Alaska 1978).

Whether lease intended as security determined by facts of case. —

Under the definition of “security interest” in this section, it is clear that the question whether a lease is intended as security is to be determined by the facts of each case. McGalliard v. Liberty Leasing Co., 534 P.2d 528 (Alaska 1975), overruled, Western Enters., Inc. v. Arctic Office Machs., Inc., 667 P.2d 1232 (Alaska 1983).

Nominality of option price. —

The definition of “security interest” makes the nominality of the option price only one of the indicia of whether the transaction is a lease or a purchase agreement. Western Enters., Inc. v. Arctic Office Machs., Inc., 667 P.2d 1232 (Alaska 1983) (decided prior to the 1993 amendment of the definition of “security interest”).

The fact that an option price is not nominal does not foreclose construing a purported lease as a purchase agreement. Western Enters., Inc. v. Arctic Office Machs., Inc., 667 P.2d 1232 (Alaska 1983) (decided prior to the 1993 amendment of the definition of “security interest”).

Cited in

Roberson v. Manning, 268 P.3d 1090 (Alaska 2012); In re Waters, — B.R. — (Bankr. D. Alaska Mar. 15, 2011).

Collateral references. —

Who is “person in business of selling goods of that kind” within provision of UCC § 1-201(9) defining buyer in ordinary course of business for purposes of UCC § 9-307(1), 73 ALR3d 338.

Equipment leases as security interest within Uniform Commercial Code § 1-201(37), 76 ALR3d 11.

Who is “buyer in ordinary course of business” under the Uniform Commercial Code, 87 ALR3d 11.

What constitutes “money” within meaning of Uniform Commercial Code, 40 ALR4th 346.

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.

Article 3. Territorial Applicability and General Rules.

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.

Chapter 02. Sales.

Revisor’s notes. —

Formerly AS 45.05.036 — 45.05.242. Renumbered in 1980. To determine the former number of a particular section, see the Table of Sections Amended in volume 11.

Cross references. —

For inapplicability of the amendments made to this chapter by ch. 35, SLA 1993, to rights and obligations arising under this chapter before January 1, 1994, see § 129(a), ch. 35, SLA 1993 in the Temporary and Special Acts; see also AS 01.10.100 .

Editor’s notes. —

Section 115(a), ch. 44, SLA 2009, provides that the amendments made by ch. 44, SLA 2009, apply “to a document of title that is issued or a bailment that arises on or after January 1, 2010” and do “not apply to a document of title that is issued or a bailment that arises before January 1, 2010, even if the document of title or bailment would be subject to [ch. 44, SLA 2009] if the document of title was issued or the bailment arose on or after January 1, 2010.” Section 115(b), ch. 44, SLA 2009 provides that ch. 44, SLA 2009, “does not apply to a right of action that has accrued before January 1, 2010.” Section 116, ch. 44, SLA 2009, provides that “A document of title issued or a bailment that arises before January 1, 2010 and the rights, obligations, and interests flowing from that document or bailment are governed by a statute amended or repealed by [ch. 44, SLA 2009] as if the amendment or repeal had not occurred and may be terminated, completed, consummated, or enforced under that statute.”

Notes to Decisions

Applicable law of sales. —

Title 45 adopts Article 2 (this chapter) of the Uniform Commercial Code as the applicable law of sales in Alaska. Prince v. Le Van, 486 P.2d 959 (Alaska 1971).

Cited in

Bendix Home Sys. v. Jessop, 644 P.2d 843 (Alaska 1982).

Collateral references. —

Julian B. McDonnell, Commercial and Consumer Warranties: Drafting, Performing and Litigating (Matthew Bender).

Article 1. Short Title, General Construction, and Subject Matter.

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)

Notes to Decisions

Applicable law of sales. —

Title 45 adopts Article 2 (AS 45.02.201 45.02.725 ) of the Uniform Commercial Code as the applicable law of sales in Alaska. Prince v. Le Van, 486 P.2d 959 (Alaska 1971).

Cited in

State Farm Mut. Auto. Ins. Co. v. Clark, 397 F. Supp. 745 (D. Alaska 1975); Sumner v. Fel-Air, Inc., 680 P.2d 1109 (Alaska 1984).

Collateral references. —

67 Am. Jur. 2d, Sales, § 1 et seq.

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

Application of warranty provisions of Uniform Commercial Code to bailments, 48 ALR3d 668.

What constitutes a transaction, a contract for sale, or a sale within scope of UCC Article 2, 4 ALR4th 85.

Applicability of UCC Article 2 to mixed contracts for sale of goods and services, 5 ALR4th 373; 5 ALR4th 501.

Pre-emption of strict liability in tort by provisions of UCC Article 2, 15 ALR4th 791.

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)

Notes to Decisions

Applied in

A & G Constr. Co. v. Reid Bros. Logging Co., 547 P.2d 1207 (Alaska 1976).

Quoted in

Sinka v. Northern Commercial Co., 491 P.2d 116 (Alaska 1971); Estate of Polushkin v. Maw, 170 P.3d 162 (Alaska 2007).

Cited in

Rego v. Decker, 482 P.2d 834 (Alaska 1971); Air Van Lines v. Buster, 673 P.2d 774 (Alaska 1983).

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)).

Notes to Decisions

“Buyer.” —

Auctioneer of a commercial fisherman’s halibut was a “merchant” under AS 45.02.104(a) where it held itself out as a knowledgeable dealer in fish sales, and it was a “buyer” under this section where it was the primary fish buyer. Deaver v. Auction Block Co., 107 P.3d 884 (Alaska 2005).

Fish are “goods” as defined by AS 45.02.105(a) . Deaver v. Auction Block Co., 107 P.3d 884 (Alaska 2005).

Quoted in

Stanley v. Fabricators, 459 P.2d 467 (Alaska 1969).

Cited in

Armco Steel Corp. v. Isaacson Structural Steel Co., 611 P.2d 507 (Alaska 1980); Luedtke v. Nabors Alaska Drilling, 834 P.2d 1220 (Alaska 1992).

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”.

Notes to Decisions

“Merchant.” —

A manufacturer of mobile homes qualifies as a “merchant” within the meaning of this section. Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

Auctioneer of a commercial fisherman’s halibut was a “merchant” under this section where it held itself out as a knowledgeable dealer in fish sales, and it was a “buyer” under AS 45.02.103(a)(1) where it was the primary fish buyer. Deaver v. Auction Block Co., 107 P.3d 884 (Alaska 2005).

“Dealer” as used in AS 43.70. —

As used in the Alaska Business License Act (AS 43.70.020 43.70.120 ), “dealer” is not synonymous with the term “merchant” as defined by this section of the Uniform Commercial Code, since the term “dealer” means “one who buys to hold for sale.” Department of Revenue v. Debenham Elec. Supply Co., 612 P.2d 1001 (Alaska 1980).

Applied in

Prince v. Le Van, 486 P.2d 959 (Alaska 1971); A & G Constr. Co. v. Reid Bros. Logging Co., 547 P.2d 1207 (Alaska 1976).

Quoted in

Sinka v. Northern Commercial Co., 491 P.2d 116 (Alaska 1971).

Collateral references. —

Farmers as “merchants” within provisions of UCC Art. 2, dealing with sales, 95 ALR3d 484.

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)

Notes to Decisions

“Goods” has been held to have a broad meaning under the code and to embrace any species of property which is not real estate, choses in action, or investment securities, and the like. Prince v. Le Van, 486 P.2d 959 (Alaska 1971).

And includes an airplane. —

The term “goods” has been held to include an airplane. Prince v. Le Van, 486 P.2d 959 (Alaska 1971).

Or a vessel. —

By the plain meaning of the words of subsection (b) of this section, a vessel is covered. The definition of goods is based on the concept of movability, and it is self-evident that a vessel is within that definition and concept. Prince v. Le Van, 486 P.2d 959 (Alaska 1971).

Or mobile homes. —

Mobile homes, being highly movable, are “goods” as defined in this section. Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

Applied in

A & G Constr. Co. v. Reid Bros. Logging Co., 547 P.2d 1207 (Alaska 1976).

Quoted in

Sinka v. Northern Commercial Co., 491 P.2d 116 (Alaska 1971); Estate of Polushkin v. Maw, 170 P.3d 162 (Alaska 2007).

Cited in

Rego v. Decker, 482 P.2d 834 (Alaska 1971); Air Van Lines v. Buster, 673 P.2d 774 (Alaska 1983).

Collateral references. —

Electricity, gas, or water furnished by public utility as “goods” within provisions of Uniform Commercial Code, Art. 2 on Sales, 48 ALR3d 1060.

What constitutes “goods” within scope of UCC Article 2, 4 ALR4th 912.

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)

Notes to Decisions

Applied in

Swenson Trucking & Excavating v. Truckweld Equip. Co., 604 P.2d 1113 (Alaska 1980); Sjong v. State, Dep't of Revenue, 622 P.2d 967 (Alaska 1981); Sumner v. Fel-Air, Inc., 680 P.2d 1109 (Alaska 1984).

Quoted in

Prince v. Le Van, 486 P.2d 959 (Alaska 1971); Sinka v. Northern Commercial Co., 491 P.2d 116 (Alaska 1971).

Collateral references. —

What constitutes a transaction, a contract for sale, or a sale within scope of UCC Article 2, 4 ALR4th 85.

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”.

Notes to Decisions

Applied in

A & G Constr. Co. v. Reid Bros. Logging Co., 547 P.2d 1207 (Alaska 1976).

Article 2. Form, Formation, and Readjustment of Contract.

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)

Notes to Decisions

Annotator’s notes. —

The cases cited below were decided under former AS 45.05.

Signature of party to be charged not absolutely required. —

Section (a) of this section begins “except as otherwise provided in this section . . . .” Therefore, the necessity of the signature of the party to be charged, required by subsection (a), is not absolute — it may be dispensed with if certain conditions set forth in subsections (b) and (c) are satisfied. A & G Constr. Co. v. Reid Bros. Logging Co., 547 P.2d 1207 (Alaska 1976).

Letter not containing sender’s personal signature. —

Letter complying with the portion of subsection (a) of this section requiring it to be sufficient to indicate that a contract for sale had been entered between the parties was also sufficient against the sender, so as to come under the exception set forth in subsection (b), although letter did not contain the sender’s personal signature but only had his name typed at the end of the letter. A & G Constr. Co. v. Reid Bros. Logging Co., 547 P.2d 1207 (Alaska 1976).

Objection by telephone does not meet the statutory requirement of a “written notice of objection.” A & G Constr. Co. v. Reid Bros. Logging Co., 547 P.2d 1207 (Alaska 1976).

Collateral references. —

72 Am. Jur. 2d, Statute of Frauds, § 1 et seq.

Construction and application of UCC § 2-201(3)(b) rendering contract of sale enforceable notwithstanding Statute of Frauds to extent it is admitted in pleading, testimony, or otherwise in court, 88 ALR3d 416.

Farmers as “merchants” within provisions of UCC Art. 2, dealing with sales, 95 ALR3d 484.

Construction and application of UCC § 2-201(3)(c) rendering contract of sale enforceable notwithstanding statute of frauds with respect to goods for which payment has been made and accepted or which have been received and accepted, 97 ALR3d 908.

Promissory estoppel as basis for avoidance of UCC statute of frauds (UCC § 2-201), 29 ALR4th 1006.

Specially manufactured goods statute of frauds exception in UCC § 2-201(3)(a), 45 ALR4th 1126.

Construction of statute of frauds exception under UCC § 2-201(2) for confirmatory writing between merchants, 82 ALR4th 709.

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 )”.

Notes to Decisions

Annotator’s notes. —

Many of the following cases were decided under former AS 45.05.

This section permits the introduction of parol evidence in sale transactions to explain or supplement the writing through evidence of consistent additional terms, unless the court finds the writing was intended as a complete and exclusive expression of the terms of the contract. Braund, Inc. v. White, 486 P.2d 50 (Alaska 1971), overruled in part, Christensen v. Alaska Sales & Serv., 335 P.3d 514 (Alaska 2014).

In order to exclude parol evidence testimony concerning the inclusion of consistent additional terms in sale agreements, the trial court must make the specific finding either that the agreement was intended to be a complete and exclusive statement of the terms of the contract, or that, as a matter of law, the additional terms asserted were such that, if they had been agreed upon, they certainly would have been included in the documents of sale. Braund, Inc. v. White, 486 P.2d 50 (Alaska 1971), overruled in part, Christensen v. Alaska Sales & Serv., 335 P.3d 514 (Alaska 2014).

Extrinsic evidence admissible. —

Extrinsic evidence, including documents and a negotiator’s testimony, was admissible to determine whether or not a prejudgment interest provision in a settlement agreement provided for compound interest. Nautilus Marine Enters. v. Exxon Mobil Corp., 305 P.3d 309 (Alaska 2013).

No finding of ambiguity is necessary in order to permit the additional testimony. Braund, Inc. v. White, 486 P.2d 50 (Alaska 1971), overruled in part, Christensen v. Alaska Sales & Serv., 335 P.3d 514 (Alaska 2014).

A party can raise the parol evidence rule even though it is a stranger to the agreement. Braund, Inc. v. White, 486 P.2d 50 (Alaska 1971), overruled in part, Christensen v. Alaska Sales & Serv., 335 P.3d 514 (Alaska 2014).

To be inconsistent, the terms must contradict or negate a term of the writing. A term or condition which has a lesser effect is provable. Braund, Inc. v. White, 486 P.2d 50 (Alaska 1971), overruled in part, Christensen v. Alaska Sales & Serv., 335 P.3d 514 (Alaska 2014).

Common-law remedy of reformation for mutual mistake not precluded. —

Even though the trial court determines that, under the Uniform Commercial Code no parol evidence can be introduced, the code does not preclude the common-law remedy of reformation for mutual mistake, to which the parol evidence rule is not applicable. Braund, Inc. v. White, 486 P.2d 50 (Alaska 1971), overruled in part, Christensen v. Alaska Sales & Serv., 335 P.3d 514 (Alaska 2014).

Collateral agreements appearing to vary written terms of agreement. —

Collateral agreements (1) that a lease and option to purchase were with one company rather than another and were intended to be re-executed on proper forms, and (2) that earlier payments under a former lease would be credited toward the purchase price both appeared to vary or alter the written terms of the agreement rather than to prove consistent additional terms, and therefore, ordinarily, parol evidence could not be used for the purpose of establishing their existence. Kupka v. Morey, 541 P.2d 740 (Alaska 1975).

Applied in

A & G Constr. Co. v. Reid Bros. Logging Co., 547 P.2d 1207 (Alaska 1976); Alaska N. Dev. v. Alyeska Pipeline Serv. Co., 666 P.2d 33 (Alaska 1983).

Collateral references. —

67 Am. Jur. 2d, Sales, § 288 et seq.

Application of parol evidence rule of UCC § 2-202 where fraud or misrepresentation is claimed in sale of goods, 71 ALR3d 1059.

Construction of statute of frauds exception under UCC § 2-201(2) for confirmatory writing between merchants, 82 ALR4th 709.

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)

Notes to Decisions

Subsection (c) relevant to uncertainty in contract for sale of land. —

While option contracts for the sale of land are not technically within the scope of the Uniform Commercial Code, the legislative decision set out in subsection (c) of this section is relevant to the question of uncertainty in such a contract. Rego v. Decker, 482 P.2d 834 (Alaska 1971) (decided under former AS 45.05.056(c)).

Collateral references. —

67 Am. Jur. 2d, Sales, § 98 et seq.

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.

Notes to Decisions

The effect of subsections (a) and (b) of this section is to form a contract based on the terms of the offeror, unless the offeree in response has proposed additional or different terms. Armco Steel Corp. v. Isaacson Structural Steel Co., 611 P.2d 507 (Alaska 1980) (decided under former AS 45.05.006).

The fact that the parties never discussed some of the terms does not preclude their becoming part of the contract. Armco Steel Corp. v. Isaacson Structural Steel Co., 611 P.2d 507 (Alaska 1980) (decided under former AS 45.05.006).

Written proposal held offer. —

A “Proposal Contract” sent by a steel fabricator to a construction company, following a telephone quotation, was an offer and was accepted by the construction company. The terms of the proposal, as subsequently modified by the parties, constituted the agreement of the parties. Armco Steel Corp. v. Isaacson Structural Steel Co., 611 P.2d 507 (Alaska 1980) (decided under former AS 45.05.006).

Quoted in

Palmer G. Lewis Co. v. Arco Chem. Co., 904 P.2d 1221 (Alaska 1995).

Cited in

Alaska N. Dev. v. Alyeska Pipeline Serv. Co., 666 P.2d 33 (Alaska 1983).

Collateral references. —

What are additional terms materially altering contracts within meaning of UCC § 2-207(2)(b), 72 ALR3d 479.

What constitutes acceptance “expressly made conditional” converting it to rejection and counteroffer under UCC § 2-207(1), 22 ALR4th 939.

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)

Notes to Decisions

Applied in

A & G Constr. Co. v. Reid Bros. Logging Co., 547 P.2d 1207 (Alaska 1976).

Collateral references. —

67 Am. Jur. 2d, Sales, §§ 110, 320 et seq., 1032.

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)

Notes to Decisions

Assignee’s known motive to interfere with performance of a contract to purchase and remove a dredge gave rise to a material factual issue precluding summary judgment as to whether the assignment was a breach of contract under subsection (b) of this section. K & K Recycling, Inc. v. Alaska Gold Co., 80 P.3d 702 (Alaska 2003).

Collateral references. —

6 Am. Jur. 2d, Assignments, § 1 et seq.

Applicability of Article 9 of Uniform Commercial Code to assignment of rights under real estate sales contract, lease agreement, or mortgage as collateral for separate transaction, 76 ALR4th 765.

Article 3. General Obligation and Construction of Contract.

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)

Notes to Decisions

Applied in

A & G Constr. Co. v. Reid Bros. Logging Co., 547 P.2d 1207 (Alaska 1976).

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)

Notes to Decisions

Applied in

Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

Cited in

Data Management v. Greene, 757 P.2d 62 (Alaska 1988).

Collateral references. —

Unconscionability, under UCC § 2-302 or § 2-719(3), of disclaimer of warranties or limitation or exclusion of damages in contract subject to UCC Article 2 (Sales), 38 ALR4th 25.

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)

Notes to Decisions

Evidence excluded. —

Whether a contract between a buyer and seller of salmon that contained limits on the parties’ expectations on quantity was an output contract, evidence of estimates, projections, and historical output was irrelevant, and was properly excluded. Nautilus Marine Enters. v. Valdez Fisheries Dev. Ass'n, 943 P.2d 1201 (Alaska 1997).

Collateral references. —

67 Am. Jur. 2d, Sales, § 260.

Requirements contracts under § 2-306(1) of Uniform Commercial Code, 96 ALR3d 1275.

Output contracts under § 2-306(1) of Uniform Commercial Code, 30 A.L.R.4th 396.

Establishment and construction of requirements contracts under § 2-306(1) of Uniform Commercial Code, 94 ALR5th 247.

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)

Notes to Decisions

Applied in

Herning v. Wigger, 398 P.2d 1002 (Alaska 1965).

Collateral references. —

67 Am. Jur. 2d, Sales, § 270.

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)

Notes to Decisions

No right to common-law action for breaches of express warranties. —

In Alaska the law is clear that when the code provides a specific right and remedy, the common law has been supplanted. The code in Alaska is available for breaches of express and implied warranties. Hence, in Alaska there is no right to a common-law action for breaches of these warranties. Alaska Airlines, Inc. v. Lockheed Aircraft Corp., 430 F. Supp. 134 (D. Alaska 1977).

This section expresses a concept of market title. Wright v. Vickaryous, 611 P.2d 20 (Alaska 1980).

A buyer need not complete a purchase which apparently will require a lawsuit to protect that which is acquired. Wright v. Vickaryous, 611 P.2d 20 (Alaska 1980).

Buyer’s actual knowledge of seller’s lack of title defeats warranty. —

Only actual knowledge on the part of the buyer of the seller’s lack of title, or of circumstances that would reasonably lead the buyer to reach such a conclusion, can defeat the statutory warranty. Sumner v. Fel-Air, Inc., 680 P.2d 1109 (Alaska 1984).

Substantial shadow on title is enough to justify the buyer’s refusal to proceed with his contractual performance. Sumner v. Fel-Air, Inc., 680 P.2d 1109 (Alaska 1984).

Breach of warranty of title constitutes nonconformity. —

A breach of the warranty of title in paragraph (a)(1) constitutes a nonconformity within the meaning of AS 45.02.608(a) . Sumner v. Fel-Air, Inc., 680 P.2d 1109 (Alaska 1984).

Formal defect in title. —

The superior court did not err when it found that a formal defect in title did not harm a purchaser of an aircraft where the reason that the purchaser could not obtain permission to operate the aircraft was due to its poor mechanical condition, since the aircraft’s condition made the matter of the seller’s duty to provide proper title irrelevant. Hayes v. Bering Sea Reindeer Prods., 983 P.2d 1280 (Alaska 1999).

Cited in

Sinka v. Northern Commercial Co., 491 P.2d 116 (Alaska 1971).

Collateral references. —

67A Am. Jur. 2d, Sales, § 729 et seq.

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)

Notes to Decisions

Applied in

Swenson Trucking & Excavating v. Truckweld Equip. Co., 604 P.2d 1113 (Alaska 1980); Cousineau v. Walker, 613 P.2d 608 (Alaska 1980).

Quoted in

Universal Motors v. Waldock, 719 P.2d 254 (Alaska 1986).

Cited in

Shooshanian v. Wagner, 672 P.2d 455 (Alaska 1983).

Collateral references. —

False representation as to quality or character of product, 35 Am. Jur. POF2d, pp. 255-356.

What constitutes “affirmation of fact” giving rise to express warranty under UCC § 2-313(1)(a), 94 ALR3d 729.

Computer sales and leases: breach of warranty, misrepresentation, or failure of consideration as defense or ground for affirmative relief, 37 ALR4th 110.

Affirmations or representations made after the sale is closed as basis of warranty under UCC § 2-313(1)(a), 47 ALR4th 200.

Computer sales and leases: time when cause of action for failure of performance accrues, 90 ALR4th 298.

Statement in advertisements, product brochures or other promotional materials as constituting “affirmation of fact” giving rise to express warranty under UCC 2-313(1)(a), 83 ALR6th 1.

Statement in product packaging, user manuals, or other product documentation as constituting “affirmation of fact” giving rise to express warranty under UCC 2-313(1)(a), 84 ALR6th 1.

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)

Notes to Decisions

No right to common-law action for breaches of implied warranties. —

In Alaska the law is clear that when the code provides a specific right and remedy, the common law has been supplanted. The code in Alaska is available for breaches of express and implied warranties. Hence, in Alaska there is no right to a common-law action for breaches of these warranties. Alaska Airlines, Inc. v. Lockheed Aircraft Corp., 430 F. Supp. 134 (D. Alaska 1977).

Two forms of warranty may commonly be implied under the code. The first of these arises under this section and is known as a warranty of merchantability; it includes a warranty that the goods are fit for ordinary purposes for which such goods are used. However, under subsection (a) of this section, a warranty of merchantability is implied only “if the seller is a merchant with respect to goods of that kind.” A second implied warranty may arise under AS 45.02.315 . It includes as an element a warranty of fitness for a particular purpose as distinguished from ordinary purposes under the warranty of merchantability. It is not, by its terms, restricted only to merchants. It applies to a seller, whether or not he is a merchant, who 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. Prince v. Le Van, 486 P.2d 959 (Alaska 1971).

Privity of contract between manufacturer and consumer not required. —

Manufacturer may be held liable for a breach of the implied warranties of this section and AS 45.02.315 without regard to privity of contract between the manufacturer and the consumer. Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

Such liability extends to direct economic loss attributable to breach. —

A manufacturer can be held liable for direct economic loss attributable to a breach of implied warranties without regard to privity of contract between the manufacturer and the ultimate purchaser. Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

Abolition of privity is extended to embrace not only warranty actions for personal injuries and property damage but also those for economic loss. Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

There is no satisfactory justification for a remedial scheme that extends the warranty action to a consumer suffering personal injury or property damage but denies similar relief to the consumer “fortunate” enough to suffer only direct economic loss. Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

The statutory rights of the manufacturer to delimit the scope of his potential liability by use of a disclaimer in compliance with AS 45.02.316 or by resort to the limitations authorized in AS 45.02.719 not only preclude extending the theory of strict liability in tort, but also make highly appropriate the extension of the theory of implied warranties to direct economic loss. Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

Policy considerations dictating abolition of privity. —

Because the typical consumer is unable to protect himself adequately from defectively manufactured goods, the manufacturer impliedly assures when putting goods on the market that they are safe, and the manufacturer has the superior ability to bear the risk, a manufacturer may be held liable for a breach of implied warranties without regard to privity of contract between the manufacturer and the customer. Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

Seat restraint system defective under consumer expectation test. —

Jury was not haphazard in deciding that a seat restraint system was unfit for ordinary use because it failed to protect smaller occupants of vehicle from submarining (lap belt moving up over top of load-bearing pelvis, causing massive abdominal injuries and spinal fracture), and it was not error for jury to find restraint system defective under the consumer expectation test. GMC v. Farnsworth, 965 P.2d 1209 (Alaska 1998).

Applied in

Swenson Trucking & Excavating v. Truckweld Equip. Co., 604 P.2d 1113 (Alaska 1980).

Quoted in

Pepsi Cola Bottling Co. v. Superior Burner Serv. Co., 427 P.2d 833 (Alaska 1967); Bendix Home Sys. v. Jessop, 644 P.2d 843 (Alaska 1982).

Cited in

Shooshanian v. Wagner, 672 P.2d 455 (Alaska 1983); Rohweder v. Fleetwood Homes, 767 P.2d 187 (Alaska 1989).

Collateral references. —

Implied warranty of fitness for particular purpose, 27 Am. Jur. POF2d, pp. 243-360.

Application of warranty provisions of Uniform Commercial Code to bailments, 48 ALR3d 668.

What constitutes a contract for sale under Uniform Commercial Code § 2-314, 78 ALR3d 696.

Implied warranty of fitness for particular purpose as including fitness for ordinary use, 83 ALR3d 656.

What are “merchantable” goods within meaning of UCC § 2-314 dealing with implied warranty of merchantability, 83 A.L.R.3d 694.

Who is “merchant” under UCC § 2-314(1) dealing with implied warranties or merchantability, 91 ALR3d 876.

Products liability: Ladders, 81 ALR5th 245.

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)

Notes to Decisions

No right to common-law action for breaches of implied warranties. —

In Alaska the law is clear that when the code provides a specific right and remedy, the common law has been supplanted. The code in Alaska is available for breaches of express and implied warranties. Hence, in Alaska there is no right to a common-law action for breaches of these warranties. Alaska Airlines, Inc. v. Lockheed Aircraft Corp., 430 F. Supp. 134 (D. Alaska 1977).

Two forms of warranty may commonly be implied under the code. The first of these arises under AS 45.02.314 , and is known as a warranty of merchantability; it includes a warranty that the goods are fit for ordinary purposes for which such goods are used. However, under AS 45.02.314 (a) a warranty of merchantability is implied only “if the seller is a merchant with respect to goods of that kind.” A second implied warranty may arise under this section. It includes as an element a warranty of fitness for a particular purpose as distinguished from ordinary purposes under the warranty of merchantability. It is not, by its terms, restricted only to merchants. It applies to a seller, whether or not he is a merchant, who 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. Prince v. Le Van, 486 P.2d 959 (Alaska 1971).

Privity of contract between manufacturer and consumer not required. —

Manufacturer may be held liable for a breach of the implied warranties of AS 45.02.314 and this section without regard to privity of contract between the manufacturer and the consumer. Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

Such liability extends to direct economic loss attributable to breach. —

A manufacturer can be held liable for direct economic loss attributable to a breach of implied warranties without regard to privity of contract between the manufacturer and the ultimate purchaser. Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

Abolition of privity is extended to embrace not only warranty actions for personal injuries and property damage but also those for economic loss. Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

There is no satisfactory justification for a remedial scheme which extends the warranty action to a consumer suffering personal injury or property damage but denies similar relief to the consumer “fortunate” enough to suffer only direct economic loss. Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

The statutory rights of the manufacturer to delimit the scope of his potential liability by use of a disclaimer in compliance with AS 45.02.316 or by resort to the limitations authorized in AS 45.02.719 not only preclude extending the theory of strict liability in tort, but also make highly appropriate the extension of the theory of implied warranties to direct economic loss. Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

Policy considerations dictating abolition of privity. —

Because the typical consumer is unable to protect himself adequately from defectively manufactured goods, the manufacturer impliedly assures when putting goods on the market that they are safe, and the manufacturer has the superior ability to bear the risk, a manufacturer may be held liable for a breach of implied warranties without regard to privity of contract between the manufacturer and the customer. Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

Applied in

Swenson Trucking & Excavating v. Truckweld Equip. Co., 604 P.2d 1113 (Alaska 1980).

Quoted in

Pepsi Cola Bottling Co. v. Superior Burner Serv. Co., 427 P.2d 833 (Alaska 1967).

Cited in

Sinka v. Northern Commercial Co., 491 P.2d 116 (Alaska 1971).

Collateral references. —

Application of warranty provisions of Uniform Commercial Code to bailments, 48 ALR3d 668.

Implied warranty of fitness for particular purpose as including fitness for ordinary use, 83 ALR3d 656.

What constitutes “particular purpose” within meaning of UCC § 2-315 dealing with implied warranty of fitness, 83 ALR3d 669.

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

Products liability: Ladders, 81 ALR5th 245.

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.

Notes to Decisions

Manufacturer given right to certain affirmative defenses. Under the Uniform Commercial Code the manufacturer is given the right to avail himself of certain affirmative defenses that can minimize his liability for a purely economic loss. Specifically, the manufacturer has the opportunity, pursuant to this section, to disclaim liability and, under AS 45.02.719 , to limit the consumer’s remedies, although the code further provides that such disclaimers and limitations cannot be so oppressive as to be unconscionable and thus violate AS 45.02.302 . In addition, the manufacturer is entitled to reasonably prompt notice from the consumer of the claimed breach of warranties, pursuant to AS 45.02.607(c)(1) . Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

Theory of strict liability in tort does not extend to the consumer who suffers only economic loss because of defective goods. Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

Adoption of the doctrine of strict liability for economic loss would be contrary to the legislature’s intent when it authorized the remedy limitations and risk allocation provisions of article 2 (this chapter). Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

Recognition of a doctrine of strict liability in tort for economic loss would seriously jeopardize the continued viability of these rights given to a manufacturer under this section, AS 45.02.607(c)(1) and AS 45.02.719 . The economically injured consumer would have a theory of redress not envisioned by the Alaska legislature when it enacted the Uniform Commercial Code, since this strict liability remedy would be completely unrestrained by disclaimer, liability limitation, and notice provisions. Further, manufacturers could no longer look to the Uniform Commercial Code provisions to provide a predictable definition of potential liability for direct economic loss. Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

Liability for direct economic loss without regard to privity. —

A manufacturer can be held liable for direct economic loss attributable to a breach of implied warranties without regard to privity of contract between the manufacturer and the ultimate purchaser. Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

The statutory rights of the manufacturer to delimit the scope of his potential liability by use of a disclaimer in compliance with this section or by resort to the limitations authorized in AS 45.02.719 not only preclude extending the theory of strict liability in tort, but also make highly appropriate the extension of the theory of implied warranties to direct economic loss. Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

Construction of subsection (e). —

By virtue of the provisions of subsection (e), the legislature patently intended to relieve manufacturers and vendors from any implied warranty obligations as regards the sale of human blood, blood plasma, and body tissue and organs. The subsection is remedial in nature and should be liberally construed. Roe v. Miles Lab., Inc., 740 F. Supp. 740 (D. Alaska 1989).

The terms “blood” or “blood plasma” in subsection (e) are to be understood to mean and comprehend all components of blood or blood plasma, irrespective of whether the same are delivered whole or fractionalized. Roe v. Miles Lab., Inc., 740 F. Supp. 740 (D. Alaska 1989).

Applied in

Cousineau v. Walker, 613 P.2d 608 (Alaska 1980).

Collateral references. —

Application of warranty provisions of Uniform Commercial Code to bailments, 48 ALR3d 668.

Construction and effect of UCC § 2-316(2) providing that implied warranty disclaimer must be “conspicuous,” 73 ALR3d 248.

Implied warranty of fitness for particular purpose as including fitness for ordinary use, 83 ALR3d 656.

Construction and effect of new motor vehicle warranty limiting manufacturer’s liability to repair or replacement of defective parts, 2 ALR4th 576.

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

Sec. 45.02.317. 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)

Notes to Decisions

The code addresses the matter of horizontal privity in this section, extending the claim for relief in warranty to any “. . . person who is in the family or household of his buyer or who is a guest in his home if it is reasonable to expect that the person may use, consume, or be affected by the goods . . . .” Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

On the subject of persons other than those named, this section is silent. Haragan v. Union Oil Co., 312 F. Supp. 1392 (D. Alaska 1970).

With regard to vertical privity, the code is totally silent and strictly neutral. Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

And it neither enlarges nor restricts other applications of warranty. Haragan v. Union Oil Co., 312 F. Supp. 1392 (D. Alaska 1970).

Question of vertical privity is for courts. —

The code leaves to the courts the question of the extent to which vertical privity of contract will or will not be required. Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

Privity of contract between manufacturer and consumer not required. —

Manufacturer may be held liable for a breach of the implied warranties of AS 45.02.314 and 45.02.315 without regard to privity of contract between the manufacturer and the consumer. Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

Privity of contract not abolished. —

Trial court properly dismissed plaintiff’s action, for breach of express and implied warranties of merchantability and fitness, against gun manufacturer for failure to allege privity of contract. Because the Alaska supreme court had never ruled that the requirement of privity was no longer necessary in an action based on warranty, the court ruled that such requirement was not abolished by Alaska supreme court rulings recognizing strict liability in tort. Smith v. Sturm, Ruger & Co., 524 F.2d 776 (9th Cir. Alaska 1975)(decided prior to Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

Such liability extends to direct economic loss attributable to breach. —

A manufacturer can be held liable for direct economic loss attributable to a breach of implied warranties without regard to privity of contract between the manufacturer and the ultimate purchaser. Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

Abolition of privity is extended to embrace not only warranty actions for personal injuries and property damage but also those for economic loss. Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

Policy considerations dictating abolition of privity. —

Because the typical consumer is unable to protect himself adequately from defectively manufactured goods, the manufacturer impliedly assures when putting goods on the market that they are safe, and the manufacturer has the superior ability to bear the risk, a manufacturer may be hld liable for a breach of implied warranties without regard to privity of contract between the manufacturer and the customer. Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

Collateral references. —

Application of warranty provisions of Uniform Commercial Code to bailments, 48 ALR3d 668.

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.

Article 4. Title, Creditors, and Good Faith Purchasers.

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.

Notes to Decisions

“Owner.” —

Because title to, and thus ownership of, fuel transferred to the service station when the supplier deposited it into the station’s tanks, the supplier was not an “owner” at the time of a fuel leak from the station’s tanks. Parks Hiway Enters., LLC v. CEM Leasing, Inc., 995 P.2d 657 (Alaska 2000).

Applied in

Sumner v. Fel-Air, Inc., 680 P.2d 1109 (Alaska 1984).

Stated in

Estate of Lewis v. State, 892 P.2d 175 (Alaska 1995).

Collateral references. —

67 Am. Jur. 2d, Sales, § 360 et seq.

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.

Notes to Decisions

Determining validity of sales. —

Except in cases involving retention by a merchant-seller in the course of trade, the code specifically leaves the validity of sales where the seller retains possession of goods sold to determination under existing state laws. Blumenstein v. Phillips Ins. Ctr., 490 P.2d 1213 (Alaska 1971).

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.

Notes to Decisions

Good faith purchaser. —

Financing on a mobile home purchased by an unmarried couple was subsequently paid off under circumstances where the man improperly took title for himself alone after having promised to give the home to the woman, who resided in the home. The man subsequently sold the home to a third party without disclosing the status of the home’s residents, or the couple’s prior agreement. The evidence at trial was inadequate to grant the third party bona fide purchaser status, both because the nature of the title held by the seller (void or voidable), and the possible good faith of the third party, were in question. Roberson v. Manning, 268 P.3d 1090 (Alaska 2012).

Applied in

Sumner v. Fel-Air, Inc., 680 P.2d 1109 (Alaska 1984).

Collateral references. —

What constitutes entrusting goods to merchant dealer under UCC § 2-403, 59 ALR4th 567.

Article 5. Performance.

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)

Notes to Decisions

When seller authorized to reclaim goods. —

Where a seller delivers goods conditional on payment and such payment is not made, this section authorizes the seller to reclaim the goods. Kelly v. Miller, 575 P.2d 1221 (Alaska 1978).

Applied in

A & G Constr. Co. v. Reid Bros. Logging Co., 547 P.2d 1207 (Alaska 1976).

Collateral references. —

17 Am. Jur. 2d, Contracts, § 491.

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)

Notes to Decisions

Applied in

Wright v. Vickaryous, 611 P.2d 20 (Alaska 1980).

Quoted in

Veach v. Meyeres Real Estate, 599 P.2d 746 (Alaska 1979).

Collateral references. —

67 Am. Jur. 2d, Sales, § 533 et seq.

Seller’s cure of improper tender or delivery under UCC § 2-508, 36 A.L.R.4th 544.

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)

Article 6. Breach, Repudiation, and Excuse.

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)

Notes to Decisions

Applied in

A & G Constr. Co. v. Reid Bros. Logging Co., 547 P.2d 1207 (Alaska 1976).

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)

Notes to Decisions

Acceptance of goods for shipment to another. —

Where a commercial fisherman’s superior court affidavit stated that he confirmed with the auctioneer’s personnel that the fish were in “excellent condition,” and also stated that the auctioneer accepted the fish for shipment to another, the auctioneer “accepted” the goods within the meaning of this section; pursuant to AS 45.02.607(a) -(b), (d) and AS 45.02.709(a)(1) , the auctioneer had the burden of establishing any breach with respect to the accepted goods and failing that, was obligated to pay the fisherman the contract rate. Deaver v. Auction Block Co., 107 P.3d 884 (Alaska 2005).

Applied in

A & G Constr. Co. v. Reid Bros. Logging Co., 547 P.2d 1207 (Alaska 1976).

Collateral references. —

67 Am. Jur. 2d, Sales, § 570 et seq.

Acceptance of goods, 37 Am. Jur. POF2d, pp. 593- 638.

Use of goods by buyer as constituting acceptance under UCC § 2-606(1)(c), 67 ALR3d 363.

Provision in draft or note directing payment “on acceptance” as affecting negotiability, 19 ALR4th 1268.

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)

Notes to Decisions

Manufacturer given right to certain affirmative defenses. —

Under the Uniform Commercial Code the manufacturer is given the right to avail himself of certain affirmative defenses that can minimize his liability for a purely economic loss. Specifically, the manufacturer has the opportunity, pursuant to AS 45.02.316 , to disclaim liability and under AS 45.02.719 to limit the consumer’s remedies, although the code further provides that such disclaimers and limitations cannot be so oppressive as to be unconscionable and thus violate AS 45.02.302 . In addition, the manufacturer is entitled to reasonably prompt notice from the consumer of the claimed breach of warranties, pursuant to paragraph (c)(1) of this section. Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

Theory of strict liability in tort does not extend to the consumer who suffers only economic loss because of defective goods. Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

Adoption of the doctrine of strict liability for economic loss would be contrary to the legislature’s intent when it authorized the remedy limitations and risk allocation provisions of article 2 of the code (this chapter). Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

Recognition of a doctrine of strict liability in tort for economic loss would seriously jeopardize the continued viability of these rights given to a manufacturer under AS 45.02.316 , paragraph (c)(1) of this section, and AS 45.02.719 . The economically injured consumer would have a theory of redress not envisioned by the Alaska legislature when it enacted the Uniform Commercial Code, since this strict liability remedy would be completely unrestrained by disclaimer, liability limitation, and notice provisions. Further, manufacturers could no longer look to the Uniform Commercial Code provisions to provide a predictable definition of potential liability for direct economic loss. Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

Failure to deliver as scheduled is a breach of the contract, whether or not it might later be found to have been an excused breach. Armco Steel Corp. v. Isaacson Structural Steel Co., 611 P.2d 507 (Alaska 1980).

And notice requirement is applicable. —

The applicability of the notice requirement to a breach of delivery terms is well established. Armco Steel Corp. v. Isaacson Structural Steel Co., 611 P.2d 507 (Alaska 1980).

Buyer need not know cause of delay. —

Paragraph (c)(1) of this section does not suggest that the buyer should know the cause of the delay before giving notice. Armco Steel Corp. v. Isaacson Structural Steel Co., 611 P.2d 507 (Alaska 1980).

No alternative to timely notice. —

On its face, the language of paragraph (c)(1) of this section allows for no alternative to timely notice. The statute states that the “buyer must . . . notify the seller of the breach or be barred from any remedy . . . .” It provides for no excuse from notice such as lack of prejudice. Armco Steel Corp. v. Isaacson Structural Steel Co., 611 P.2d 507 (Alaska 1980).

Strict construction of notice requirement. —

The overriding purpose of the notice requirement is to encourage consistent business practices and early settlement of disputes. This purpose is best served by strict adherence to the literal requirements of the statute. Armco Steel Corp. v. Isaacson Structural Steel Co., 611 P.2d 507 (Alaska 1980).

Consumer’s complaint as notice. —

A complaint filed by a retail consumer within a reasonable period after goods are accepted satisfies the statutory notice requirement. Shooshanian v. Wagner, 672 P.2d 455 (Alaska 1983).

Third-party complaint did not constitute notice within the meaning of paragraph (c)(1) of this section. Armco Steel Corp. v. Isaacson Structural Steel Co., 611 P.2d 507 (Alaska 1980).

The requirements for notice to the seller are not formal, and the notice in some instances need not be written. A & G Constr. Co. v. Reid Bros. Logging Co., 547 P.2d 1207 (Alaska 1976).

When notice unreasonable as matter of law. —

Although the reasonableness of notice is generally a question of fact, where there is undisputed evidence of an unduly long delay in giving notice, a court may find that the notice was unreasonable as a matter of law. Armco Steel Corp. v. Isaacson Structural Steel Co., 611 P.2d 507 (Alaska 1980).

Notice not given within reasonable time. —

Where no notice of defect is given, the question of reasonableness does not arise. The overriding purpose of the notice requirement is to encourage consistent business practices and early settlement of disputes. This purpose is best served by strict adherence to the literal requirements of the statute. Armco Steel Corp. v. Isaacson Structural Steel Co., 611 P.2d 507 (Alaska 1980).

Burden of establishing breach in purchase of fish. —

Where a commercial fisherman’s affidavit stated that he confirmed with the auctioneer’s personnel that the fish were in “excellent condition,” and that the auctioneer accepted the fish for shipment to another, the auctioneer “accepted” the goods within the meaning of AS 45.02.606(a)(1) -(2); pursuant to this section and AS 45.02.709(a)(1) , the auctioneer had the burden of establishing any breach with respect to the accepted goods and, failing that, was obligated to pay the fisherman the contract rate. Deaver v. Auction Block Co., 107 P.3d 884 (Alaska 2005).

Burden of proof in car warranty case. —

In a car warranty case, the consumer must offer credible evidence that the defect is materials or workmanship related. Such evidence establishes a prima facie case of breach of an express warranty, and the burden then shifts to the dealer or manufacturer to prove consumer abuse. Universal Motors v. Waldock, 719 P.2d 254 (Alaska 1986).

Stated in

Carr-Gottstein Foods Co. v. Wasilla, LLC, 182 P.3d 1131 (Alaska 2008).

Cited in

Delta Junction v. Mack Trucks, 670 P.2d 1128 (Alaska 1983).

Collateral references. —

67 Am. Jur. 2d, Sales, §§ 1095 et seq., 1109 et seq.

Necessity that buyer of goods give notice of breach of warranty to manufacturer under UCC § 2-607, requiring notice to seller of breach, 24 ALR4th 277.

Sufficiency and timeliness of buyer’s notice under UCC § 607(3)(a) of seller’s breach of warranty, 89 ALR5th 319.

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)

Notes to Decisions

No particular form for revocation of acceptance. —

Notice of a revocation of acceptance under the UCC need not be in any particular form to be effective; it is sufficient if it informs the seller that the buyer is dissatisfied with the goods and does not wish to retain them. Sumner v. Fel-Air, Inc., 680 P.2d 1109 (Alaska 1984).

Breach of warranty of title constitutes nonconformity. —

A breach of the AS 45.02.312(a)(1) warranty of title constitutes a nonconformity within the meaning of AS 45.02.608(a) . Sumner v. Fel-Air, Inc., 680 P.2d 1109 (Alaska 1984).

Encumbrance not precluding revocation. —

An encumbrance, here a mechanic’s lien, did not represent such a material deterioration of the property that the buyer was precluded from revoking its acceptance. Sumner v. Fel-Air, Inc., 680 P.2d 1109 (Alaska 1984).

Cited in

Bendix Home Sys. v. Jessop, 644 P.2d 843 (Alaska 1982); Rohweder v. Fleetwood Homes, 767 P.2d 187 (Alaska 1989).

Collateral references. —

Time for revocation of acceptance of goods under UCC § 2-608(2), 65 ALR3d 354.

Measure and elements of buyer’s recovery upon revocation of acceptance of goods under UCC § 2-608(1), 65 ALR3d 388.

What constitutes “substantial impairment” entitling buyer to revoke his acceptance of goods under UCC § 2-608(1), 38 A.L.R.5th 1.

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)

Notes to Decisions

Availability of this section. —

This section may be invoked only in situations where a party to an executory contract has reason to be concerned about whether or not another party will tender a performance due in the future. Sumner v. Fel-Air, Inc., 680 P.2d 1109 (Alaska 1984).

This section is not relevant in situations where a breach has, in fact, occurred. Sumner v. Fel-Air, Inc., 680 P.2d 1109 (Alaska 1984).

Cited in

Kupka v. Morey, 541 P.2d 740 (Alaska 1975).

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)

Notes to Decisions

Applied in

Sumner v. Fel-Air, Inc., 680 P.2d 1109 (Alaska 1984).

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)

Article 7. Remedies.

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)

Notes to Decisions

This section allows a seller to reclaim goods within a specified period of time where the seller discovers that the buyer is insolvent. Kelly v. Miller, 575 P.2d 1221 (Alaska 1978).

And successful reclamation of goods excludes all other remedies with respect to such goods. Kelly v. Miller, 575 P.2d 1221 (Alaska 1978).

Collateral references. —

67A Am. Jur. 2d, Sales, § 927 et seq.

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)

Notes to Decisions

Recovery of lost profits. —

Seller was entitled to its lost profits under subsection (b) of this section where the record showed that the product was specifically modified for the buyer and was not generally marketable. Uchitel Co. v. Telephone Co., 646 P.2d 229 (Alaska 1982).

Applied in

Anchorage Centennial Dev. Co. v. Van Wormer & Rodrigues, 443 P.2d 596 (Alaska 1968).

Collateral references. —

67A Am. Jur. 2d, Sales, § 992 et seq.

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)

Notes to Decisions

Seller may recover damages after reclaiming contract goods upon default by the buyer where the seller has retained a security interest in the goods sold. Kelly v. Miller, 575 P.2d 1221 (Alaska 1978).

Obligation to pay contract rate upon failure to show breach. —

Where a commercial fisherman’s affidavit stated that he confirmed with the auctioneer’s personnel that the fish were in “excellent condition,” and that the auctioneer accepted the fish for shipment to another, the auctioneer “accepted” the goods within the meaning of AS 45.02.606(a)(1) -(2); pursuant to this section and AS 45.02.607(a) , (b) and (d), the auctioneer had the burden of establishing any breach with respect to the accepted goods and, failing that, was obligated to pay the fisherman the contract rate. Deaver v. Auction Block Co., 107 P.3d 884 (Alaska 2005).

Seller precluded from recovering for loss resulting from breach of contract. —

Where the parties entered into a contract for the sale of a tractor and the buyer had unconditional possession of it, the seller was limited to contractual remedies for breach of contract. This section provided the seller the means by which he could have recovered damages from the buyer for breach of the contract. In repossessing the tractor without judicial process, and disposing of it as he saw fit, the seller fashioned his own remedy and in so doing, forewent whatever damage claim he may have had against the buyer. Therefore, the seller’s failure to seek the remedy provided him under subsection (a)(1) of this section combined with his resort to a remedy not recognized at either law or equity, precluded him from recovering damages for any loss he may have suffered as a result of the breach of contract. Kelly v. Miller, 575 P.2d 1221 (Alaska 1978).

Cited in

Newell v. National Bank, 646 P.2d 224 (Alaska 1982).

Collateral references. —

Seller’s recovery of price of goods from buyer under UCC § 2-709, 90 ALR3d 1141.

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)

Notes to Decisions

Seller’s action precluded recovery for remaining loss. —

Buyer’s failure to pay the down payment on a tractor on the date of the sale agreement or the remaining purchase price within a reasonable time was a breach of contract. At that point, the seller could have sued for the price of the tractor under AS 45.02.709(a)(1) and for any incidental damages resulting from the breach under this section. Presumably he could have attached the tractor or other property of the buyer after the action was commenced. Following judgment he could have executed on the property to satisfy his judgment. Instead, the seller simply reclaimed the tractor without benefit of judicial process and disposed of it as he saw fit, and was precluded from recovering for his remaining loss. Kelly v. Miller, 575 P.2d 1221 (Alaska 1978).

Cited in

Uchitel Co. v. Telephone Co., 646 P.2d 229 (Alaska 1982).

Collateral references. —

67A Am. Jur. 2d, Sales, § 1153 et seq.

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)

Notes to Decisions

Application of section. —

This section applies when a buyer rightfully rejects or revokes acceptance of nonconforming goods; under subsection (a) of this section “cancellation” of the contract and restitution of “so much of the price as has been paid” is available. This remedy is, in effect, one form of rescission, and a notice of rescission may be given effect as a revocation of acceptance and a cancellation, thus giving effect to the intent of the buyer to terminate the contract within the terminology of the code. Prince v. Le Van, 486 P.2d 959 (Alaska 1971).

Remedies under this section and AS 45.02.714 distinguished. —

The remedies available under AS 45.02.714 are to be distinguished from the rescission type remedy provided by this section. The former applies when a buyer neither rejects nor revokes acceptance of nonconforming goods, but seeks instead to accept them and recover damages for the nonconformity. Under this provision, a buyer who has accepted goods under AS 45.02.606(a) has no remedy at all unless he notifies the sellers of breach within a reasonable time as required by AS 45.02.607(c)(1) . If proper notification is given following acceptance, damages but not cancellation is the proper remedy. Prince v. Le Van, 486 P.2d 959 (Alaska 1971).

Applied in

Sumner v. Fel-Air, Inc., 680 P.2d 1109 (Alaska 1984).

Collateral references. —

67A Am. Jur. 2d, Sales, § 1034 et seq.

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)

Notes to Decisions

Remedies under this section and AS 45.02.711 distinguished. —

The remedies available under this section are to be distinguished from the rescission type remedy provided by AS 45.02.711 . The former applies when a buyer neither rejects nor revokes acceptance of nonconforming goods, but seeks instead to accept them and recover damages for the nonconformity. Under this provision, a buyer who has accepted goods under AS 45.02.606(a) has no remedy at all unless he notifies the sellers of breach within a reasonable time as required by AS 45.02.607(c)(1) . If proper notification is given following acceptance, damages but not cancellation is the proper remedy. Prince v. Le Van, 486 P.2d 959 (Alaska 1971).

The code provides a comprehensive scheme for recovery of damages for injuries to the person resulting from breach of warranty. Sinka v. Northern Commercial Co., 491 P.2d 116 (Alaska 1971).

And a period of four years is provided in which to bring suit for such damages. Sinka v. Northern Commercial Co., 491 P.2d 116 (Alaska 1971).

Where an action is correctly brought within the framework of the Uniform Commercial Code, the applicable statute of limitations is that provided by the code, although the damages sought are for personal injuries. Sinka v. Northern Commercial Co., 491 P.2d 116 (Alaska 1971).

Because the repealer section provided by the Alaska legislature in enacting the Uniform Commercial Code (SLA 1962, ch. 114, § 10.103) provides in part that “. . . all acts and parts of acts inconsistent with this Act are hereby repealed,” the general two-year statute of limitations (AS 09.10.070 ) was repealed to the extent that it might otherwise control recovery for personal injuries resulting from breach of warranty under the code. Sinka v. Northern Commercial Co., 491 P.2d 116 (Alaska 1971).

Measure of damages for consumer accepting goods and then suing. —

The measure of damages set out in subsection (b) is the measure of damages ordinarily provided by the code for the consumer who purchases and accepts goods and then sues because the goods are not as warranted. Frequently, the measure is determined by reference to the cost of repairs. Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

Finance charges should not be included in a determination of the value of goods. Bendix Home Sys. v. Jessop, 644 P.2d 843 (Alaska 1982).

Subsection (b) requires a “loss of bargain” measure of damages if the difference between the actual value of an item and its value as warranted, rather than its purchase price. Bendix Home Sys. v. Jessop, 644 P.2d 843 (Alaska 1982).

Liability for direct economic loss without regard to privity. —

A manufacturer can be held liable for direct economic loss attributable to a breach of implied warranties without regard to privity of contract between the manufacturer and the ultimate purchaser. Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

There is no satisfactory justification for a remedial scheme that extends the warranty action to a consumer suffering personal injury or property damage but denies similar relief to the consumer “fortunate” enough to suffer only direct economic loss. Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

Distinction between direct economic loss and consequential economic loss. —

Direct economic loss encompasses damage based on insufficient product value; that is, either “out of pocket” — the difference in value between what is given and what is received, or “loss of bargain” — the difference between the value of what is received and its value as represented. Consequential economic loss includes all indirect loss, such as loss of profits resulting from inability to make use of the defective product. Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

The item of consequential damage most frequently sought is lost profits attributable to the warranty breach. Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

Damages must be proved. —

Plaintiffs lacked a remedy under this section for the simple reason that they failed to prove any damages suffered as a result of the uninsurability of a vessel. Prince v. Le Van, 486 P.2d 959 (Alaska 1971).

Cited in

Alaska Airlines, Inc. v. Lockheed Aircraft Corp., 430 F. Supp. 134 (D. Alaska 1977); Pierce v. Catalina Yachts, Inc., 2 P.3d 618 (Alaska 2000).

Collateral references. —

67A Am. Jur. 2d, Sales, § 1142 et seq.

Measure of damages in action for breach of warranty of title to personal property under UCC § 2-714, 94 ALR3d 583.

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)

Notes to Decisions

The code provides a comprehensive scheme for recovery of damages for injuries to the person resulting from breach of warranty. Sinka v. Northern Commercial Co., 491 P.2d 116 (Alaska 1971).

And a period of four years is provided in which to bring suit for such damages. Sinka v. Northern Commercial Co., 491 P.2d 116 (Alaska 1971).

Where an action is correctly brought within the framework of the Uniform Commercial Code, the applicable statute of limitations is that provided by the code, although the damages sought are for personal injuries. Sinka v. Northern Commercial Co., 491 P.2d 116 (Alaska 1971).

Because the repealer section provided by the Alaska legislature in enacting the Uniform Commercial Code (SLA 1962, ch. 114, § 10.103) provides in part that “. . . all acts and parts of acts inconsistent with this Act are hereby repealed,” the general two-year statute of limitations (AS 09.10.070 ) was repealed to the extent that it might otherwise control recovery for personal injuries resulting from breach of warranty under the code. Sinka v. Northern Commercial Co., 491 P.2d 116 (Alaska 1971).

Liability for direct economic loss without regard to privity. —

A manufacturer can be held liable for direct economic loss attributable to a breach of implied warranties without regard to privity of contract between the manufacturer and the ultimate purchaser. Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

There is no satisfactory justification for a remedial scheme that extends the warranty action to a consumer suffering personal injury or property damage but denies similar relief to the consumer “fortunate” enough to suffer only direct economic loss. Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

Distinction between direct economic loss and consequential economic loss. —

See Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

The item of consequential damage most frequently sought is lost profits attributable to the warranty breach. Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

Stated in

Bendix Home Sys. v. Jessop, 644 P.2d 843 (Alaska 1982).

Cited in

Pierce v. Catalina Yachts, Inc., 2 P.3d 618 (Alaska 2000).

Collateral references. —

Buyer’s incidental and consequential damages from seller’s breach under UCC § 2-715, 96 ALR3d 299.

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)

Notes to Decisions

Applied in

Gudenau v. Bierria, 868 P.2d 907 (Alaska 1994).

Collateral references. —

67A Am. Jur. 2d, Sales, § 1046 et seq.

71 Am. Jur. 2d, Specific Performance, § 1 et seq.

Specific performance of sale of goods under UCC § 2-716, 26 ALR4th 294.

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)

Notes to Decisions

Applied in

A & G Constr. Co. v. Reid Bros. Logging Co., 547 P.2d 1207 (Alaska 1976).

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.

Notes to Decisions

Manufacturer given right to certain affirmative defenses. —

Under the Uniform Commercial Code the manufacturer is given the right to avail itself of certain affirmative defenses that can minimize liability for a purely economic loss. Specifically, the manufacturer has the opportunity, pursuant to AS 45.02.316 , to disclaim liability and under this section to limit the consumer’s remedies, although the code further provides that such disclaimers and limitations cannot be so oppressive as to be unconscionable and thus violate AS 45.02.302 . In addition, the manufacturer is entitled to reasonably prompt notice from the consumer of the claimed breach of warranties, pursuant to AS 45.02.607(c)(1) . Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

Theory of strict liability in tort does not extend to the consumer who suffers only economic loss because of defective goods. Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

Adoption of the doctrine of strict liability for economic loss would be contrary to the legislature’s intent when it authorized the remedy limitations and risk allocation provisions of article 2 (this chapter). Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

Recognition of a doctrine of strict liability in tort for economic loss would seriously jeopardize the continued viability of these rights given to a manufacturer under AS 45.02.316 , 45.02.607(c)(1) , and this section. The economically injured consumer would have a theory of redress not envisioned by the Alaska legislature when it enacted the Uniform Commercial Code, since this strict liability remedy would be completely unrestrained by disclaimer, liability limitation, and notice provisions. Further, manufacturers could no longer look to the Uniform Commercial Code provisions to provide a predictable definition of potential liability for direct economic loss. Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

Liability for direct economic loss without regard to privity. —

A manufacturer can be held liable for direct economic loss attributable to a breach of implied warranties without regard to privity of contract between the manufacturer and the ultimate purchaser. Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

The statutory rights of the manufacturer to limit the scope of potential liability by use of a disclaimer in compliance with AS 45.02.316 or by resort to the limitations authorized in this section not only preclude extending the theory of strict liability in tort, but also make highly appropriate the extension of the theory of implied warranties to direct economic loss. Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

Limiting consequential damages. —

Because the company acted in bad faith when it breached the warranty, the company could not conscionably enforce the warranty provision barring consequential damages. Pierce v. Catalina Yachts, Inc., 2 P.3d 618 (Alaska 2000).

When a limited repair remedy fails, and a separate provision of the warranty bars consequential damages, the code fails to say whether a court should apply subsection (b) by restoring the buyer’s right to seek consequential damages, or whether it should instead apply subsection (c) by enforcing the bar against consequential damages unless unconscionable. However, the court found that subsections (b) and (c) should be interpreted independently, thus allowing parties latitude to contract around consequential damages while protecting buyers from unconscionable results. Pierce v. Catalina Yachts, Inc., 2 P.3d 618 (Alaska 2000).

Collateral references. —

Unconscionability, under UCC § 2-302 or § 2-719(3), of disclaimer of warranties or limitation or exclusion of damages in contract subject to UCC Article 2 (Sales), 38 ALR4th 25.

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)

Notes to Decisions

Cited in

Alaska Airlines, Inc. v. Lockheed Aircraft Corp., 430 F. Supp. 134 (D. Alaska 1977).

Collateral references. —

37 Am. Jur. 2d, Fraud and Deceit, § 1 et seq.

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)

Notes to Decisions

Injuries to the person. The code provides a comprehensive scheme for recovery of damages for injuries to the person resulting from breach of warranty. Sinka v. Northern Commercial Co., 491 P.2d 116 (Alaska 1971).

And a period of four years is provided in which to bring suit for such damages. Sinka v. Northern Commercial Co., 491 P.2d 116 (Alaska 1971).

Where an action is correctly brought within the framework of the Uniform Commercial Code, the applicable statute of limitations is that provided by the code, although the damages sought are for personal injuries. Sinka v. Northern Commercial Co., 491 P.2d 116 (Alaska 1971).

Because the repealer section provided by the Alaska legislature in enacting the Uniform Commercial Code (SLA 1962, ch. 114, § 10.103) provides in part that “. . . all acts and parts of acts inconsistent with this Act are hereby repealed,” the general two-year statute of limitations (AS 09.10.070 ) was repealed to the extent that it might otherwise control recovery for personal injuries resulting from breach of warranty under the code. Sinka v. Northern Commercial Co., 491 P.2d 116 (Alaska 1971).

When statute begins to run. —

In a breach of warranty action, unless the warranty at issue “explicitly extends to future performance” — which an implied warranty does not — the four-year statute of limitations provided in this section begins to run on the date the product is purchased. Armour v. Alaska Power Auth., 765 P.2d 1372 (Alaska 1988).

When warranty extends to future performance. —

Under this section, a party is not entitled to maintain an action for breach of warranty simply by bringing suit within four years of the termination of the warranty period; when a warranty extends to future performance, the cause of action accrues on the day the defect is or should have been discovered, provided this day is within the warranty period. Kodiak Elec. Ass'n v. Delaval Turbine, 694 P.2d 150 (Alaska 1984).

Privity of contract is required to maintain an action for breach of express or implied warranty. Anderson v. Fairchild Hiller Corp., 358 F. Supp. 976 (D. Alaska 1973).

To require strict liability claims to be brought within two years is a reasonable interpretation of the public policy of Alaska. Anderson v. Fairchild Hiller Corp., 358 F. Supp. 976 (D. Alaska 1973).

But those in privity allowed longer limitation. —

There are valid reasons for allowing a longer limitation period to plaintiffs who have contracted with the defendant or who otherwise satisfy the privity requirement than to those who have not. Anderson v. Fairchild Hiller Corp., 358 F. Supp. 976 (D. Alaska 1973).

If a product is defective and causes injuries, the seller wants to know about it as soon as possible to take appropriate steps to prevent further injuries and further liability. For example, the seller may recall the products that have already been sold, correct those which have been manufactured but not yet sold, and change the manufacturing process to eliminate the defect in the future. Thus, a longer limitation period is allowed to persons whose identity a seller knows or is able to discover through the privity limitation, whereas the shorter period is required of persons whose identity a seller has no way of knowing until a lawsuit is filed. Anderson v. Fairchild Hiller Corp., 358 F. Supp. 976 (D. Alaska 1973).

Because a seller has not had an opportunity to bargain for a shorter limitation period with persons who lack privity of contract, it would be inappropriate to give such persons the benefit of the same longer statute of limitations governing those persons who have bargained and contracted with the seller. Anderson v. Fairchild Hiller Corp., 358 F. Supp. 976 (D. Alaska 1973).

Period may be reduced. —

This section expressly allows the parties to reduce the period to not less than one year by original agreement. Anderson v. Fairchild Hiller Corp., 358 F. Supp. 976 (D. Alaska 1973).

The minimum period of limitation to which the parties may agree is one year from the accrual of the cause of action. Fireman's Fund Ins. Co. v. Sand Lake Lounge, 514 P.2d 223 (Alaska 1973).

Soundness of this provision applies equally to other contracts. —

The soundness of the minimum one-year provision concerning contracts for the sale of goods applies equally to other contracts, such as fire insurance policies. Fireman's Fund Ins. Co. v. Sand Lake Lounge, 514 P.2d 223 (Alaska 1973).

Action held not barred. —

Mechanical services company’s breach of contract claim was not barred by the statute of limitations, because the Uniform Commercial Code financing statements filed by the bank did not provide constructive notice of the elements of a claim for statute of limitations purposes. Ranes & Shine, LLC v. MacDonald Miller Alaska, Inc., 355 P.3d 503 (Alaska 2015).

Legislature has expressed strong opposition to extension of any period of limitations. Alaska Airlines, Inc. v. Lockheed Aircraft Corp., 430 F. Supp. 134 (D. Alaska 1977).

Applied in

Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976).

Cited in

Alaska Energy Auth. v. Fairmont Ins. Co., 845 P.2d 420 (Alaska 1993).

Collateral references. —

51 Am. Jur. 2d, Limitation of Actions, § 160 et seq.

Application to security aspects of sales contract, of UCC § 2-725 limiting time for bringing actions for breach of sales contract, 16 ALR4th 1335.

What statute of limitations applies to actions for personal injuries based on breach of implied warranty under UCC provisions governing sales (UCC § 2-725(1)), 20 ALR4th 915.

What constitutes warranty explicitly extending to “future performance” for purposes of UCC § 2-725(2), 81 ALR5th 483.

Chapter 03. Negotiable Instruments.

Revisor’s notes. —

Formerly AS 45.05.246 — 45.05.402. Renumbered in 1980. To determine the former number of a particular section, see the Tables of Sections Amended in volume 11.

Cross references. —

For inapplicability of the amendments made to this chapter by ch. 35, SLA 1993, to rights and obligations arising under this chapter before January 1, 1994, see § 129(a), ch. 35, SLA 1993 in the Temporary and Special Acts; see also AS 01.10.100 .

Notes to Decisions

Cited in

Newell v. National Bank, 646 P.2d 224 (Alaska 1982).

Collateral references. —

Frederick M. Hart, Negotiable Instruments Under the UCC (Matthew Bender).

Article 1. Short Title, Form, and Interpretation.

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 )”.

Notes to Decisions

“Issuer.” —

Act of endorsing a check is not sufficient to establish guilt under AS 11.46.280 . A defendant who merely endorsed a check that had been signed over to her did not issue the check. Delay-Wilson v. State, 264 P.3d 375 (Alaska Ct. App. 2011).

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.

Notes to Decisions

State treasury warrant. —

State treasury warrant constituted a negotiable instrument, where it met the requirements of this section. National Bank v. Univentures 1231, 824 P.2d 1377 (Alaska 1992).

Cited in

Faulkner v. State, 445 P.2d 815 (Alaska 1968); Alaska Native Tribal Health Consortium v. Settlement Funds Held for E.R., 84 P.3d 418 (Alaska 2004); Wolff v. Cunningham, 187 P.3d 479 (Alaska 2008); Hussein-Scott v. Scott, 298 P.3d 179 (Alaska 2013).

Collateral references. —

11 Am. Jur. 2d, Bills and Notes, § 12 et seq.

What constitutes unconditional promise to pay under Uniform Commercial Code § 3-104(1)(b), 88 ALR3d 1100.

Negotiability of instrument under terms of UCC § 3-104(1) as affected by statements expressly limiting negotiability or transferability, 58 ALR4th 632.

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)

Notes to Decisions

Quoted in

Bjorn-Roli v. Mulligan, 436 P.3d 962 (Alaska 2019).

Collateral references. —

11 Am. Jur. 2d, Bills and Notes, § 86 et seq.

What constitutes good faith under UCC § 1-208 dealing with insecure or at will acceleration clauses, 85 ALR4th 284.

Construction and effect of “future advances” clauses under UCC Article 9, 90 ALR4th 859.

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)

Notes to Decisions

Quoted in

Gudenau v. Bierria, 868 P.2d 907 (Alaska 1994).

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)

Notes to Decisions

Stated in

Hussein-Scott v. Scott, 298 P.3d 179 (Alaska 2013).

Collateral references. —

11 Am. Jur. 2d, Bills and Notes, § 108.

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)

Notes to Decisions

Cited in

Faulkner v. State, 445 P.2d 815 (Alaska 1968).

Collateral references. —

11 Am. Jur. 2d, Bills and Notes, § 99 et seq.

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)

Notes to Decisions

Quoted in

Bjorn-Roli v. Mulligan, 436 P.3d 962 (Alaska 2019).

Cited in

Holta v. Certified Fin. Servs., 49 P.3d 1104 (Alaska 2002); Fortson v. Fortson, 131 P.3d 451 (Alaska 2006).

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.]

Article 2. Transfer and Negotiation.

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)

Notes to Decisions

Cited in

In re Waters, — B.R. — (Bankr. D. Alaska Mar. 15, 2011).

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)

Notes to Decisions

Stated in

Nicdao v. Chase Home Fin., 839 F. Supp. 2d 1051 (D. Alaska 2012).

Cited in

In re Waters, — B.R. — (Bankr. D. Alaska Mar. 15, 2011).

Collateral references. —

11 Am. Jur. 2d, Bills and Notes, § 193 et seq.

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.]

Article 3. Rights of a Holder.

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)

Notes to Decisions

Applied in

Charmley v. Alaska Mun. Employees Fed. Credit Union, 588 P.2d 1267 (Alaska 1979).

Quoted in

Nicdao v. Chase Home Fin., 839 F. Supp. 2d 1051 (D. Alaska 2012).

Cited in

In re Waters, — B.R. — (Bankr. D. Alaska Mar. 15, 2011); Hooks v. Alaska United States Fed. Credit Union, 413 P.3d 1192 (Alaska 2018).

Collateral references. —

11 Am. Jur. 2d, Bills and Notes, § 209 et seq.

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)

Notes to Decisions

A determination of whether a depositary has acted in good faith involves a subjective inquiry as to whether the bank extended credit on a check having knowledge of facts that suggest that the check would eventually be dishonored. Frantz v. First Nat'l Bank, 584 P.2d 1125 (Alaska 1978) (decided prior to the 1993 amendment, which rewrote this section).

Draftsmen of the Uniform Commercial Code expressly rejected the idea of including a concept of objective commercial reasonableness within the meaning of good faith. Frantz v. First Nat'l Bank, 584 P.2d 1125 (Alaska 1978) (decided prior to the 1993 amendment, which rewrote this section).

Foreclosure. —

Bank was a holder in due course in a foreclosure because recordation was not required for a valid mortgage assignment, a deed of trust assignment’s recordation date raised no fact issue as to when the note was assigned, and the only evidence showed the note was assigned before the note went into default. Erkins v. Alaska Tr., LLC, 355 P.3d 516 (Alaska 2015).

Extension of immediate credit on check. —

Absent subjective knowledge that the payor would not honor the check he wrote, the extension of immediate credit on a check does not manifest bad faith. Frantz v. First Nat'l Bank, 584 P.2d 1125 (Alaska 1978) (decided prior to the 1993 amendment, which rewrote this section).

Applied in

Charmley v. Alaska Mun. Employees Fed. Credit Union, 588 P.2d 1267 (Alaska 1979); National Bank v. Univentures 1231, 824 P.2d 1377 (Alaska 1992).

Quoted in

Erkins v. Alaska Tr., LLC, 265 P.3d 292 (Alaska 2011).

Collateral references. —

11 Am. Jur. 2d, Bills and Notes, § 209 et seq.

What constitutes, under the Uniform Negotiable Instruments Law or Commercial Code, a reasonable time for taking a demand instrument, so as to support the taker’s status as holder in due course, 10 ALR3d 1199.

What constitutes taking instrument in good faith, and without notice of infirmities or defenses, to support holder-in-due-course status, under UCC § 3-302, 36 ALR4th 212.

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)

Notes to Decisions

Incapacity. —

In a foreclosure, a debtor could not claim an incapacity defense against a bank because incapacity results in a voidable contract under Alaska law, and the bank was a holder in due course immune from such a defense. Erkins v. Alaska Tr., LLC, 355 P.3d 516 (Alaska 2015).

In Alaska, a party’s incapacity during formation of a contract may result in a voidable, not a void obligation. Erkins v. Alaska Tr., LLC, 355 P.3d 516 (Alaska 2015).

Applied in

Frantz v. First Nat'l Bank, 584 P.2d 1125 (Alaska 1978); Jackson v. Nangle, 677 P.2d 242 (Alaska 1984).

Quoted in

Erkins v. Alaska Tr., LLC, 265 P.3d 292 (Alaska 2011).

Collateral references. —

Fraud in the inducement and fraud in the factum as defense under UCC § 3-305 against holder in due course, 78 ALR3d 1020.

Duress, incapacity, illegality, or similar defense rendering obligation a nullity as affecting enforceability of negotiable instrument against holder in due course under UCC § 3-305(a)(1)(ii), 89 ALR5th 577.

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)

Notes to Decisions

Payment with “payable through” draft. —

A workers’ compensation claimant’s timely receipt of a “payable through” draft suspended defendant’s obligation to him, contingent on final clearance. Harper v. K & W Trucking Co., 725 P.2d 1066 (Alaska 1986) (decided under former AS 45.03.802).

Acceptance not shown. —

When a taxpayer offered to redeem foreclosed property by means of a promissory note, a city's failure to return the taxpayer's proposed promissory note did not constitute an acceptance of the taxpayer's offer because (1) the city's acts of explicitly rejecting the taxpayer's offer and seeking a tax deed clearly showed a contrary intent, and, (2) if the taxpayer did not receive the city's letter, the letter still showed the city's contemporaneous intent confirmed by the city's conduct of not recording the taxpayer's “redemption” and not issuing a certificate of redemption. Bingman v. City of Dillingham, 376 P.3d 1245 (Alaska 2016).

Failure to redeem. —

City did not accept a taxpayer's offer to redeem foreclosed property by a promissory note because the city explicitly rejected the offer by a letter and subsequently sought a tax deed after the close of the redemption period. Bingman v. City of Dillingham, 376 P.3d 1245 (Alaska 2016).

Applied in

Gudenau v. Bierria, 868 P.2d 907 (Alaska 1994).

Quoted in

Hooks v. Alaska United States Fed. Credit Union, 413 P.3d 1192 (Alaska 2018).

Collateral references. —

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

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. 45.03.311. 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.

Article 4. Liability of Parties.

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)

Notes to Decisions

Corporate officer’s liability as endorser. —

A corporate officer was bound as an endorser in his individual capacity since he signed the promissory note under the corporate name with the designation of his representative capacity but also signed the note above the corporate name with no designation of any representative capacity. FDIC v. Woodside Constr., Inc., 979 F.2d 172 (9th Cir. Alaska 1992) (decided prior to the 1993 amendment of AS 45.03).

Collateral references. —

Construction and application of UCC § 3-403(2) dealing with personal liability of authorized representative who signs negotiable instrument in his own name, 97 ALR3d 798.

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)

Notes to Decisions

Applied in

Frantz v. First Nat'l Bank, 584 P.2d 1125 (Alaska 1978).

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. 45.03.415. 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)

Notes to Decisions

Applied in

FDIC v. Woodside Constr., Inc., 979 F.2d 172 (9th Cir. Alaska 1992).

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. 45.03.416. 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)

Notes to Decisions

Cited in

Johnson v. Schaub, 867 P.2d 812 (Alaska 1994).

Collateral references. —

Who is accommodation party under Uniform Commercial Code § 3-415, 90 A.L.R.3d 342.

Reasonable commercial standards defense for banks under UCC § 3-419(3), 49 ALR4th 888.

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.

Article 5. Presentment, Notice of Dishonor, and Protest.

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.]

Article 6. Discharge.

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)

Notes to Decisions

Original law restated. —

Former provisions stating that a holder could discharge a party by renouncing the holder’s rights by a writing signed and delivered or by surrender of the instrument to the party to be discharged restated the original Section 122 of the Negotiable Instruments Law. First Nat'l Bank v. Taylor, 488 P.2d 1026 (Alaska 1971).

Original Section 122 of the Negotiable Instruments Law construed. —

See First Nat'l Bank v. Taylor, 488 P.2d 1026 (Alaska 1971).

Surety not discharged under former AS 45.03.606(a)(1). —

In an action to collect a defaulted loan, where the state did not release or agree not to sue the principal, did not agree to suspend the right to enforce against the principal the instrument or collateral, and did not otherwise discharge the principal debtor, the surety was not discharged. State v. McKinnon, 667 P.2d 1239 (Alaska 1983).

Collateral references. —

11 Am. Jur. 2d, Bills and Notes, § 357 et seq.

13 Am. Jur. 2d, Cancellation of Instruments, § 1 et seq.

What constitutes renunciation by surrender of negotiable instrument under UCC § 3-605, 96 ALR3d 1144.

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.]

Chapter 04. Bank Deposits and Collections.

Revisor’s notes. —

Formerly AS 45.05.404 — 45.05.474. Renumbered in 1980. To determine the former number of a particular section, see the Tables of Sections Amended in volume 11.

Cross references. —

For inapplicability of the amendments made to this chapter by ch. 35, SLA 1993, to rights and obligations arising under this chapter before January 1, 1994, see § 129(a), ch. 35, SLA 1993 in the Temporary and Special Acts; see also AS 01.10.100 .

Collateral references. —

Bank’s liability for payment or withdrawal on less than required number of signatures, 7 A.L.R.4th 655.

Article 1. General Provisions and Definitions.

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)

Notes to Decisions

Applicability. —

Statute of limitations in AS 09.10.120(a) is the applicable statute of limitations for a determination of overpayment because such a determination benefits the State by recouping overpaid benefits and collecting a penalty; AS 09.10.053 did not apply since this action did not arise under a contract, AS 45.04.111 did not apply because it applied only to actions under the Uniform Commercial Code, and AS 09.10.040 did not apply because this action was not based on any judgment. Levi v. State, 433 P.3d 1137 (Alaska 2018).

Article 2. Collection of Items: Depositary and Collecting Banks.

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”.

Notes to Decisions

Immediate credit on checks encouraged. —

While the Uniform Commercial Code does not require a depositary to give immediate credit on a check, it encourages this practice by granting the bank rights against the drawer of the check on which immediate credit is extended. Frantz v. First Nat'l Bank, 584 P.2d 1125 (Alaska 1978) (decided under AS 45.04 prior to the 1993 amendments).

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)

Notes to Decisions

Immediate credit on checks encouraged. —

While the Uniform Commercial Code does not require a depositary to give immediate credit on a check, it encourages this practice by granting the bank rights against the drawer of the check on which immediate credit is extended. Frantz v. First Nat'l Bank, 584 P.2d 1125 (Alaska 1978) (decided under AS 45.04 prior to the 1993 amendments).

Collateral references. —

10 Am. Jur. 2d, Banks, § 784.

What constitutes final payment under UCC § 4-213, 23 A.L.R.4th 203.

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)

Notes to Decisions

Immediate credit on checks encouraged. —

While the Uniform Commercial Code does not require a depositary to give immediate credit on a check, it encourages this practice by granting the bank rights against the drawer of the check on which immediate credit is extended. Frantz v. First Nat'l Bank, 584 P.2d 1125 (Alaska 1978) (decided under AS 45.04 prior to the 1993 amendments).

Collateral references. —

What constitutes final payment under UCC § 4-213, 23 A.L.R.4th 203.

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)

Article 3. Collection of Items: Payor Banks.

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)

Article 4. Relationship Between Payor Bank and Its Customer.

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)

Notes to Decisions

Punitive damages. —

This section would not permit an award of punitive damages if the wrongful dishonor occurred through a mistake since damages would be limited to those “actually proven,” but a payor bank is liable for “proximate” damages if the dishonor was not inadvertent. Alaska Statebank v. Fairco, 674 P.2d 288 (Alaska 1983) (decided prior to the 1993 amendment rewriting the language of this section).

Award of punitive damages was justified where there was ample evidentiary support for finding that following the taking of possession of a retail store the bank willfully and with reckless disregard of the consequences of its actions refused payment on outstanding store checks presented for payment, returned the checks to the store’s suppliers and vendors, and marked the checks “account closed”; at this time the account was not closed, the bank was aware the account was not closed, and these actions were not the result of mistake or inadvertence, but rather were designed to further the bank’s interest. Alaska Statebank v. Fairco, 674 P.2d 288 (Alaska 1983).

Collateral references. —

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

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.

What constitutes wrongful dishonor of check rendering payor bank liable to drawer under UCC § 4-402, 88 ALR4th 568.

Who may recover for wrongful dishonor of check under UCC § 4-402, 88 ALR4th 613.

Damages recoverable for wrongful dishonor of check under UCC § 4-402, 88 ALR4th 644.

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)

Notes to Decisions

Quoted in

National Bank v. Univentures 1231, 824 P.2d 1377 (Alaska 1992).

Collateral references. —

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

Construction and effect of UCC § 4-403(2) regulating oral or written nature of stop-payment order, 29 ALR4th 228.

Sufficiency of description of check in stop-payment order under UCC § 4-403, 35 ALR4th 985.

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)

Notes to Decisions

Customer’s duty to verify his statement arises only if: (1) The bank has sent the customer a statement of account; (2) it holds the statement pursuant to the customer’s request; or (3) it makes the statements “otherwise available.” Vest v. First Nat'l Bank, 670 P.2d 707 (Alaska 1983) (decided prior to the 1993 amendment rewriting the language of this section).

Effect of failure to verify. —

If the bank is able to establish that it satisfied one of the requirements giving rise to a customer’s duty to verify his statement, and that one of its customers failed to examine his statements and notify the bank, the bank is entitled to claim the protection of this section unless the customer can then avoid the statutory bar by resorting to an estoppel theory. Vest v. First Nat'l Bank, 670 P.2d 707 (Alaska 1983).

Collateral references. —

Construction and application of UCC 4-406, requiring customer to discover and report unauthorized signature, in cases involving bank’s payment of check or withdrawal on less than required number of signatures, 7 ALR4th 1111.

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)

Article 5. Collection of Documentary Drafts.

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)

Chapter 05. Letters of Credit.

Revisor’s notes. —

Formerly AS 45.05.476 — 45.05.508. Renumbered in 1980. To determine the former number of a particular section, see the Tables of Sections Amended in volume 11.

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”.

Notes to Decisions

Cited in

American Nat'l Bank & Trust Co. v. International Seafoods, 735 P.2d 747 (Alaska 1987).

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.]

Chapter 06. Bulk Transfers.

[Repealed, § 127 ch 35 SLA 1993.]

Chapter 07. Warehouse Receipts, Bills of Lading, and Other Documents of Title.

Revisor’s notes. —

Formerly AS 45.05.532 45.05.611 . Renumbered in 1980. To determine the former number of a particular section, see the Tables of Sections Amended in volume 11.

Editor’s notes. —

Section 115(a), ch. 44, SLA 2009, provides that the amendments made by ch. 44, SLA 2009, apply “to a document of title that is issued or a bailment that arises on or after January 1, 2010” and do “not apply to a document of title that is issued or a bailment that arises before January 1, 2010, even if the document of title or bailment would be subject to [ch. 44, SLA 2009] if the document of title was issued or the bailment arose on or after January 1, 2010.” Section 115(b), ch. 44, SLA 2009 provides that ch. 44, SLA 2009, “does not apply to a right of action that has accrued before January 1, 2010.” Section 116, ch. 44, SLA 2009, provides that “document of title issued or a bailment that arises before January 1, 2010, and the rights, obligations, and interests flowing from that document or bailment are governed by a statute amended or repealed by [ch. 44, SLA 2009] as if the amendment or repeal had not occurred and may be terminated, completed, consummated, or enforced under that statute.”

Article 1. General.

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.

Article 2. Warehouse Receipts: Special Provisions.

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.

Article 3. Bills of Lading: Special Provisions.

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.

Article 4. Warehouse Receipts and Bills of Lading: General Obligations.

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.”

Article 5. Warehouse Receipts and Bills of Lading: Negotiation and Transfer.

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.”

Article 6. Warehouse Receipts and Bills of Lading: Miscellaneous Provisions.

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.]

Chapter 08. Investment Securities.

Revisor’s notes. —

Formerly AS 45.05.612 — 45.05.688. Renumbered in 1980. To determine the former number of a particular section, see the Tables of Sections Amended in volume 11.

Cross references. —

For inapplicability of the amendments made to this chapter by ch. 35, SLA 1993, to rights and obligations arising under this chapter before January 1, 1994, see § 129(a), ch. 35, SLA 1993 in the Temporary and Special Acts; see also AS 01.10.100 . For inapplicability of amendments made to this chapter by ch. 17, SLA 1996 to actions or proceedings commenced before January 1, 1997, see § 69(a), ch. 17, SLA 1996 in the Temporary and Special Acts.

Collateral references. —

What is a “security” under UCC Art. 8, 11 ALR4th 1036.

Article 1. Short Title and General Matters.

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)

Notes to Decisions

This section has as its primary theme the negotiability of the certificates. Calista Corp. v. De Young, 562 P.2d 338 (Alaska 1977) (decided under former AS 45.08.317).

And this negotiability cannot exist unless there is only one certificate for given shares, carrying with it the ownership of the shares themselves. Calista Corp. v. De Young, 562 P.2d 338 (Alaska 1977) (decided under former AS 45.08.317).

To this end the statute requires that, to attach or levy upon a security, actual seizure must be had to avoid a situation where securities could be traded that are subject to liens not appearing on the face of the instrument. Calista Corp. v. De Young, 562 P.2d 338 (Alaska 1977) (decided under former AS 45.08.317).

Actual attachment not required for native corporation stocks. —

The legislative intentions of this section were not violated by the failure of the trial court to require actual attachment of native corporation stocks, which are totally inalienable for 20 years from the date of December 18, 1971, by virtue of the Alaska Native Claims Settlement Act, 43 U.S.C. § 1601 et seq. Calista Corp. v. De Young, 562 P.2d 338 (Alaska 1977) (decided under former AS 45.08.317).

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)

Article 2. Issue — Issuer.

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)

Notes to Decisions

Cited in

Williams v. Williams, 129 P.3d 428 (Alaska 2006).

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)

Article 3. Purchase.

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)

Notes to Decisions

Cited in

Williams v. Williams, 129 P.3d 428 (Alaska 2006).

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)

Notes to Decisions

Cited in

Williams v. Williams, 129 P.3d 428 (Alaska 2006).

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.]

Article 4. Registration.

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.]

Article 5. Security Entitlements.

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)

Chapter 09. Secured Transactions; Sales of Accounts, Contract Rights, and Chattel Paper.

[Repealed, § 31 ch 113 SLA 2000. For current law, see AS 45.29.]

Chapter 10. Alaska Retail Installment Sales Act.

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)

Notes to Decisions

Cited in

Munn v. Thornton, 956 P.2d 1213 (Alaska 1998).

Collateral references. —

68A Am. Jur. 2d, Secured Transactions, § 1 et seq.

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, account book, or other written statement relating to each purchase, must set out all of the information required by AS 45.10.030 and constitute the retail installment contract for each purchase.
  2. On each succeeding purchase under the original document, the sales slip, account book, or other written statement may at the option of the seller constitute the memorandum required by AS 45.10.100 .

History. (§ 5 ch 141 SLA 1962)

Sec. 45.10.050. Catalog or printed solicitation.

  1. A retail installment contract, or retail charge agreement, negotiated and entered into by mail or telephone without personal solicitation by a salesman or representative of the seller and based upon a catalog of the seller or other printed solicitation of business, if the catalog or other printed solicitation clearly sets out the cash sale prices and other terms of sales to be made through this medium, shall be made as provided in this section.  The provisions of this chapter with respect to retail installment contracts and retail charge agreements are applicable to these sales, except that the retail installment contract when completed by the buyer need not contain the items required by AS 45.10.030 .
  2. When the retail installment contract is received from the retail buyer, the seller shall prepare a written memorandum containing all of the information required by AS 45.10.030 to be included in a retail installment contract. Instead of delivering a copy of the contract to the retail buyer as provided in AS 45.10.020 , the seller shall deliver to the buyer a copy of the memorandum before the due date of the first installment payable under the contract.  If the catalog or other printed solicitation does not set out all of the other terms of sales in addition to the cash sales prices, the memorandum shall be delivered to the buyer before or at the time of delivery of the goods or services.

History. (§ 6 ch 141 SLA 1962; am § 1 ch 45 SLA 1978)

Sec. 45.10.060. Signing of incomplete contracts.

The seller may not obtain the signature of the buyer to a contract if it contains blank spaces of items that are essential provisions of the transaction, except as provided in AS 45.10.050 . However, if delivery of the goods is not made at the time of the execution of the contract, the identifying numbers or marks of the goods or similar information and the due date of the first installment may be inserted by the seller in the seller’s counterpart of the contract after it has been signed by the buyer.

History. (§ 7 ch 141 SLA 1962)

Sec. 45.10.070. Prepayment.

  1. A retail installment contract must contain a statement that the buyer may pay the total unpaid balance on the contract at any time.  A buyer who prepays in full the unpaid balance at any time before its final due date shall, if the contract is not in default more than two months, receive a refund credit of the unearned portion of the service charge for the prepayment.
  2. Except when the service charge is computed on an add-on or simple interest basis, the amount of the refund credit shall be computed according to the “rule of 78ths”; that is, it shall represent at least as great a proportion of the original service charge over $25 in case of a retail installment sale of a motor vehicle, or $10 in case of a retail installment sales of goods other than a motor vehicle, as (1) the sum of the monthly or other periodic unpaid balances under the schedule of payments in the contract beginning as of the date after the prepayment that is the next succeeding monthly or other periodic anniversary date of the due date of the first installment under the contract, or, if the prepayment is before the due date of the first installment under the contract, then as of the date after the prepayment that is the next succeeding monthly or other periodic anniversary date of the date of the contract bears to (2) the sum of all the monthly or other periodic unpaid balances under the schedule of installment payments in the contract.
  3. If the amount of refund credit is less than $1, no refund credit need be made.

History. (§ 8 ch 141 SLA 1962; am § 12 ch 134 SLA 1996)

Collateral references. —

Advancements or prepayment future advances clauses under UCC Article 9, construction and effect of, 90 ALR4th 859.

Sec. 45.10.080. Delinquency, collection, and other charges; other contract provisions.

  1. If authority to do so is contained in the contract or agreement, the holder of a retail installment contract or retail charge agreement may collect any delinquency, collection or dishonored check charges, attorney fees, court costs, and disbursements. In this case, the charge must be reasonable, and no attorney fee may be recovered unless the contract is referred for collection to an attorney not a salaried employee of the holder.
  2. The contract may contain other provisions not inconsistent with the purposes of this chapter.

History. (§ 9 ch 141 SLA 1962; am § 13 ch 134 SLA 1996)

Sec. 45.10.090. Receipts and requests for statements.

  1. A buyer shall be given a written receipt for any payment when made in cash.
  2. Upon written request of the buyer, the holder of a retail installment contract shall give or forward to the buyer a written statement of the dates and amounts of payments and the total amount unpaid under the contract.  This statement shall be given the buyer once without charge; if an additional statement is requested by the buyer, it shall be supplied by the holder at a charge not in excess of $1 for each additional statement supplied.

History. (§ 10 ch 141 SLA 1962)

Sec. 45.10.100. Consolidation of contracts.

  1. If, in a retail installment transaction, a retail buyer makes a purchase of goods or services from a retail seller from whom the buyer has previously purchased goods or services under a retail installment contract, and the amount under the previous contract has not been fully paid, the subsequent purchase may, at the seller’s option, be included in and consolidated with the previous contract.  This chapter, with respect to a retail installment contract, is applicable to the subsequent purchase.  In the event of consolidation, the seller shall furnish to the buyer, before the due date of the first installment of the consolidated contract, the items of information under AS 45.10.030 or 45.10.040 and a memorandum setting out
    1. the outstanding balance of the previous contract or contracts;
    2. the amount of the time balance owed by the buyer to the seller for the subsequent purchase;
    3. the consolidated time balance; and
    4. the revised installments applicable to the consolidated time balance.
  2. The seller shall deliver a copy of the memorandum to the buyer before the due date of the first installment of the consolidated contract.
  3. When the subsequent purchase is made, if the seller has retained title or taken a lien or other security interest in any of the goods purchased under one of the contracts included in the consolidation,
    1. the entire amount of all payments made before the subsequent purchase is considered to have been applied on the previous purchase;
    2. if the amount of each installment payment is not increased in connection with the subsequent purchase, the subsequent payments are considered to be allocated first to the previous purchase;
    3. if the amount of each installment payment is increased in connection with the subsequent purchase, an amount equal to the original periodic payment is allocated first to the previous purchase, and the amount of the increase may, at the seller’s option, be considered to be allocated to the subsequent purchase;
    4. the amount of a down payment on the subsequent purchase is allocated in its entirety to the subsequent purchase.
  4. The provisions of (c) of this section do not apply to a case where the previous and subsequent purchases involve equipment, parts, or other goods attached or affixed to goods previously purchased and not fully paid, or to services in connection with goods previously purchased and not fully paid, rendered by the seller at the buyer’s request.

History. (§ 11 ch 141 SLA 1962)

Sec. 45.10.110. Notice of service charge and monthly statement.

  1. At or before the time a retail charge agreement is made, the seller shall advise the buyer in writing on the application form or otherwise, or orally that a service charge will be computed on the outstanding balance for each month, which need not be a calendar month, or other regular period agreed upon, the schedule or rate by which the service charge will be computed, and that the buyer may pay the total unpaid balance at any time.  If this information is given orally, the seller shall, upon approval of the buyer’s credit, deliver to the buyer or mail to the buyer at the buyer’s address a memorandum setting out this information.
  2. The seller or holder of a retail charge agreement shall promptly supply the buyer with a statement as of the end of each monthly period, which need not be a calendar month, or other regular period agreed upon in which there is an unpaid balance. The statement must include the unpaid balance under the retail charge agreement and the amount of a service charge for the period.

History. (§ 12 ch 141 SLA 1962)

Sec. 45.10.120. Extent of service charge.

  1. Notwithstanding any other law, the service charge included in a retail installment contract, retail charge agreement, revolving charge agreement, or other retail charge agreement must be at the rate agreed upon by the retail seller and the buyer.
  2. This section does not limit or restrict the method of computing the service charge, whether by way of add-on, simple interest, or otherwise, so long as that method is disclosed in the contract and agreed upon by the retail seller and the buyer.

History. (§ 13 ch 141 SLA 1962; am § 1 ch 154 SLA 1966; am § 2 ch 79 SLA 1980; am § 14 ch 134 SLA 1996)

Sec. 45.10.130. Insurance.

If the cost of insurance is included in the retail installment contract or retail charge agreement and a separate charge is made to the buyer for the insurance,

  1. the contract or agreement must state the nature, purpose, and amount of the insurance, and in connection with the sale of a motor vehicle, the contract must state that the insurance coverage ordered under the terms of this contract does or does not include “bodily injury liability,” “public liability,” and “property damage liability” coverage, as applicable;
  2. the contract or agreement must state whether the insurance is to be procured by the buyer or the seller;
  3. the amount included for the insurance may not exceed the premiums chargeable in accordance with the rate fixed for the insurance by the insurer except where the amount is less than $1; and if the insurance is cancelled or terminated for any reason, the refund for unearned insurance premiums received by the seller or an assignee of the seller, together with the unearned portion of the service charge applicable to the insurance, shall be credited to the final maturing installments of the retail installment contract or retail charge agreement, and the remaining balance of the unearned insurance premiums shall be refunded to the buyer; however, no cash refund is required if the amount is less than $1;
  4. if the insurance is to be procured by the seller or holder, the seller or holder shall, within 45 days after delivery of the goods or furnishing of the services under the contract, deliver, mail, or cause to be mailed to the buyer at the address as specified in the contract a notice that the insurance is procured, a copy of the policy or policies of insurance, or a certificate of the insurance so procured.

History. (§ 14 ch 141 SLA 1962)

Sec. 45.10.140. Agreement not to assert claim or defense.

A provision of a retail installment contract or retail charge agreement by which the buyer agrees not to assert a claim or defense arising out of the sale against the seller or an assignee is invalid.

History. (§ 15 ch 141 SLA 1962)

Sec. 45.10.150. Nonwaiver of chapter.

No act or agreement of the retail buyer before or at the time of the making of a retail installment contract, retail charge agreement, or purchases under the contract or agreement constitutes a valid waiver of any of the provisions of this chapter or of any remedies granted to the buyer by law.

History. (§ 16 ch 141 SLA 1962)

Sec. 45.10.160. Contracts and agreements executed before 1963.

This chapter does not invalidate or make unlawful a retail installment contract or retail charge agreement executed before January 1, 1963.

History. (§ 22 ch 141 SLA 1962)

Sec. 45.10.170. Action by attorney general.

The attorney general may bring an action in the name of the state against a person to restrain and prevent a violation of this chapter.

History. (§ 19 ch 141 SLA 1962)

Sec. 45.10.180. Assurance of discontinuance.

  1. In the enforcement of this chapter, the attorney general may accept an assurance of discontinuance of an act or practice considered in violation of this chapter from a person engaging in or who has engaged in the act or practice.  The assurance shall be in writing and be filed with and subject to the approval of the superior court of the district in which the alleged violator resides or in which the principal place of business of the alleged violator is located.
  2. Failure to perform the terms of the assurance is prima facie proof of a violation of this chapter for the purpose of securing an injunction as provided in AS 45.10.170 , and for the purposes of AS 45.10.190 .

History. (§ 20 ch 141 SLA 1962)

Sec. 45.10.190. Barring recovery for noncompliance.

A seller who enters into a contract or agreement that does not comply with the provisions of this chapter or who violates a provision of this chapter except as a result of an accident or bona fide error may not recover a service charge, official fee, or a delinquency or collection charge under or in connection with the related retail installment contract or purchases under a retail charge agreement. The seller or holder may nevertheless recover from the buyer an amount equal to the cash price of the goods or services and the cost to the seller or holder of insurance included in the transaction.

History. (§ 18 ch 141 SLA 1962)

Sec. 45.10.200. Penalty for violation of order or injunction.

A person who violates an order or injunction issued under this chapter is punishable by a fine of not more than $1,000, or by imprisonment for not more than six months, or by both.

History. (§ 21 ch 141 SLA 1962)

Sec. 45.10.210. Penalty for violation of chapter.

A person who wilfully and intentionally violates a provision of this chapter is guilty of a misdemeanor and, upon conviction, is punishable by a fine of not more than $1,000, or by imprisonment for not more than six months, or by both.

History. (§ 17 ch 141 SLA 1962)

Sec. 45.10.215. Applicability of chapter.

For the purposes of this chapter, a retail installment contract or retail charge agreement is entered into in this state, and is therefore subject to the provisions of this chapter, if either the seller offers or agrees to sell to a resident buyer in this state or if a resident buyer in this state accepts the offer to sell or makes the offer to buy in this state, regardless of any specification in the contract as to its situs.

History. (§ 2 ch 45 SLA 1978; am § 39 ch 22 SLA 2015)

Effect of amendments. —

The 2015 amendment, effective July 1, 2015, deleted “Alaska” in four places, and replaced it with “this state” or similar, in three places.

Sec. 45.10.220. Definitions.

In this chapter, unless the context otherwise requires,

  1. “cash sale price” means the price for which the seller would have sold or furnished to the buyer and the buyer would have bought or obtained from the seller the goods or services that are the subject matter of a retail installment transaction if the sale had been a sale for cash; the cash sale price may include taxes and charges for transferring vehicle titles, delivery, installation, servicing, repairs, alterations, or improvements;
  2. “goods” means personal chattels purchased primarily for personal, family, or household use and not for commercial or business use, but does not include money or, except as provided in the next phrase, chose in action; “goods” includes merchandise certificates or coupons issued by a retail seller to be used in their face amount instead of cash in exchange for goods or services sold by the seller and goods, including a manufactured home, that, at the time of sale or subsequently, are to be so affixed to real property as to become a part of it, whether or not severable from it; in this paragraph, “manufactured home” has the meaning given in AS 45.29.102 ;
  3. “official fees” means the amount of the fees set by law for filing, recording, or otherwise perfecting and releasing or satisfying a retained title, lien, or other security interest created by a retail installment transaction or premiums payable for insurance in lieu of perfecting a security interest if the premiums do not exceed the fees that would otherwise normally be incurred for perfecting, filing, recording, or otherwise perfecting and releasing or satisfying a retained title, lien, or other security interest;
  4. “person” means an individual, partnership, joint venture, corporation, association, or any other group, however organized;
  5. “principal balance” means the cash sale price of the goods or services that are the subject matter of a retail installment contract less the amount of the buyer’s down payment in money or goods or both, plus
    1. the amounts for insurance and official fees included in the contract if a separate identified charge is made and stated in the contract for insurance and official fees; and
    2. 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;
  6. “rate” means the percentage that, when multiplied by the outstanding balance for each month or other installment period, yields the amount of the service charge for the month or period;
  7. “retail buyer” or “buyer” means a person who buys or agrees to buy goods or obtain services or agrees to have services rendered or furnished from a retail seller;
  8. “retail charge agreement,” “revolving charge agreement,” or “charge agreement” means an instrument
    1. entered into or performed in the state that sets out the terms of retail installment transactions that may be made under the agreement from time to time; and
    2. under the terms of which a service charge is to be computed from time to time in relation to the buyer’s unpaid balance;
  9. “retail installment contract” or “contract” means a contract, other than a retail charge agreement or an instrument reflecting a sale price made under a retail charge agreement, entered into or performed in the state for a retail installment transaction; “retail installment contract” includes
    1. a chattel mortgage;
    2. a conditional sale contract; and
    3. a contract in the form of a bailment or a lease if the bailee or lessee contracts to pay a sum substantially equivalent to or in excess of the value of the goods sold as compensation for their use and if it is agreed that the bailee or lessee is bound to become, or for no other or a merely nominal consideration, has the option of becoming the owner of the goods upon full compliance with the provisions of the bailment or lease;
  10. “retail installment transaction” means a transaction in which a retail buyer purchases goods or services from a retail seller under a retail installment contract or a retail charge agreement that provides for a service charge under which the buyer agrees to pay the unpaid balance in one or more installments;
  11. “retail seller” or “seller” means a person engaged in the business of selling goods or services to retail buyers;
  12. “service charge,” however denominated or expressed, means the amount that is paid or payable for the privilege of purchasing goods or services to be paid for by the buyer in installments over a period of time; “service charge” does not include the amount charged for insurance premiums, delinquency charges, attorney fees, court costs, or official fees;
  13. “services” means work, labor, or services of any kind purchased primarily for personal, family, or household use and not for commercial or business use, whether or not furnished in connection with the delivery, installation, servicing, repair, or improvement of goods; “services” includes repairs, alterations, or improvements upon or in connection with real property, but does not include the services of a professional person licensed by the state, or services for which the price charged is required by law to be determined or approved by or to be filed, subject to approval or disapproval, with the United States or a state or a department, division, agency, officer, or official of either as in the case of transportation services;
  14. “time balance” means the principal balance plus the service charge.

History. (§ 1 ch 141 SLA 1962; am § 15 ch 134 SLA 1996; am § 3 ch 67 SLA 2006; am § 57 ch 41 SLA 2009; am § 29 ch 64 SLA 2012)

Cross references. —

For a saving clause relating to interpretation of the provisions of ch. 64, SLA 2012, see § 31, ch. 64, SLA 2012 in the 2012 Temporary and Special Acts.

For severability of the provisions of ch. 64, SLA 2012, see § 32, ch. 64, SLA 2012 in the 2012 Temporary and Special Acts.

Effect of amendments. —

The 2009 amendment, effective June 21, 2009, in (6), made stylistic changes.

The 2012 amendment, effective January 1, 2013, in (2), deleted “but is not limited to” following “ ‘goods’ includes”, added “, including a manufactured home” following “sold by the seller and goods”, and added “in this paragraph, ‘manufactured home’ has the meaning given in AS 45.29.102 ” at the end of the paragraph.

Notes to Decisions

Quoted in

Munn v. Thornton, 956 P.2d 1213 (Alaska 1998).

Sec. 45.10.230. Short title.

This chapter may be cited as the Alaska Retail Installment Sales Act.

History. (§ 23 ch 141 SLA 1962)

Chapter 12. Leases.

Revisor’s notes. —

This chapter is based on Article 2A of the Uniform Commercial Code.

Cross references. —

For cases of conflict between this chapter and AS 45.35, see AS 45.35.090 .

Editor’s notes. —

Section 115(a), ch. 44, SLA 2009, provides that the amendments made by ch. 44, SLA 2009, apply “to a document of title that is issued or a bailment that arises on or after January 1, 2010” and do “not apply to a document of title that is issued or a bailment that arises before January 1, 2010, even if the document of title or bailment would be subject to [ch. 44, SLA 2009] if the document of title was issued or the bailment arose on or after January 1, 2010.” Section 115(b), ch. 44, SLA 2009 provides that ch. 44, SLA 2009, “does not apply to a right of action that has accrued before January 1, 2010.” Section 116, ch. 44, SLA 2009, provides that “A document of title issued or a bailment that arises before January 1, 2010, and the rights, obligations, and interests flowing from that document or bailment are governed by a statute amended or repealed by [ch. 44, SLA 2009] as if the amendment or repeal had not occurred and may be terminated, completed, consummated, or enforced under that statute.”

Collateral references. —

Jeffrey J. Wong, Equipment Leasing (Matthew Bender).

Article 1. General Provisions.

Sec. 45.12.101. Short title.

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

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.102. Scope.

This chapter applies to any transaction, regardless of form, that creates a lease.

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.103. Definitions and index of definitions.

  1. In this chapter, unless the context otherwise requires,
    1. “buyer in ordinary course of business” means a person who, in good faith and without knowledge that the sale to that person is in violation of the ownership rights or security interest or leasehold interest of a third party in the goods, buys in ordinary course from a person in the business of selling goods of that kind, but does not include a pawnbroker; “buying” may be for cash or by exchange of other property or on secured or unsecured credit and includes acquiring goods or documents of title under a preexisting contract for sale, but does not include a transfer in bulk or as security for or in total or partial satisfaction of a money debt;
    2. “cancellation” occurs when either party puts an end to the lease contract for default by the other party;
    3. “commercial unit” means a unit of goods that by commercial usage is a single whole for purposes of lease 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 a line of machinery, or a quantity, as a gross or carload, or any other unit treated in use or in the relevant market as a single whole;
    4. “conforming” goods or performance under a lease contract means goods or performance that are in accordance with the obligations under the lease contract;
    5. “consumer lease” means a lease that a lessor regularly engaged in the business of leasing or selling makes to a lessee who is an individual and who takes under the lease primarily for personal, family, or household purposes;
    6. “fault” means wrongful act, omission, breach, or default;
    7. “finance lease” means a lease with respect to which
      1. the lessor does not select, manufacture, or supply the goods;
      2. the lessor acquires the goods or the right to possession and use of the goods in connection with the lease; and
      3. one of the following occurs:
        1. the lessee receives a copy of the contract by which the lessor acquired the goods or the right to possession and use of the goods before signing the lease contract;
        2. the lessee’s approval of the contract by which the lessor acquired the goods or the right to possession and use of the goods is a condition to effectiveness of the lease contract;
        3. the lessee, before signing the lease contract, receives an accurate and complete statement designating the promises and warranties, and any disclaimers of warranties, limitations or modifications of remedies, or liquidated damages, including those of a third party, such as the manufacturer of the goods, provided to the lessor by the person supplying the goods in connection with or as part of the contract by which the lessor acquired the goods or the right to possession and use of the goods; or
        4. if the lease is not a consumer lease, the lessor, before the lessee signs the lease contract, informs the lessee in writing of the identity of the person supplying the goods to the lessor, unless the lessee has selected that person and directed the lessor to acquire the goods or the right to possession and use of the goods from that person; that the lessee is entitled under this chapter to the promises and warranties, including those of a third party, provided to the lessor by the person supplying the goods in connection with or as part of the contract by which the lessor acquired the goods or the right to possession and use of the goods; and that the lessee may communicate with the person supplying the goods to the lessor and receive an accurate and complete statement of those promises and warranties, including any disclaimers and limitations of them or of remedies;
    8. “goods” means all things that are movable at the time of identification to the lease contract, or are fixtures under AS 45.12.309 , but the term does not include money, documents, instruments, accounts, chattel paper, general intangibles, or minerals or the like, including oil and gas, before extraction; the term also includes the unborn young of animals;
    9. “installment lease contract” means a lease contract that authorizes or requires the delivery of goods in separate lots to be separately accepted, even though the lease contract contains the clause “each delivery is a separate lease” or its equivalent;
    10. “lease” means a transfer of the right to possession and use of goods for a term in return for consideration, but a sale, including a sale on approval or a sale or return, or retention or creation of a security interest is not a lease; unless the context clearly indicates otherwise, the term includes a sublease;
    11. “lease agreement” means the bargain, with respect to the lease, of the lessor and the lessee in fact as found in their language or by implication from other circumstances including course of dealing or usage of trade or course of performance as provided in this chapter; unless the context clearly indicates otherwise, the term includes a sublease agreement;
    12. “lease contract” means the total legal obligation that results from the lease agreement as affected by this chapter and other applicable rules of law; unless the context clearly indicates otherwise, the term includes a sublease contract;
    13. “leasehold interest” means the interest of the lessor or the lessee under a lease contract;
    14. “lessee” means a person who acquires the right to possession and use of goods under a lease; unless the context clearly indicates otherwise, the term includes a sublessee;
    15. “lessee in ordinary course of business” means a person who, in good faith and without knowledge that the lease to that person is in violation of the ownership rights or security interest or leasehold interest of a third party in the goods, leases in ordinary course from a person in the business of selling or leasing goods of that kind, but does not include a pawnbroker; “leasing” may be for cash or by exchange of other property or on secured or unsecured credit and includes acquiring goods or documents of title under a preexisting lease contract, but does not include a transfer in bulk or as security for or in total or partial satisfaction of a money debt;
    16. “lessor” means a person who transfers the right to possession and use of goods under a lease; unless the context clearly indicates otherwise, the term includes a sublessor;
    17. “lessor’s residual interest” means the lessor’s interest in the goods after expiration, termination, or cancellation of the lease contract;
    18. “lien” means a charge against or interest in goods to secure payment of a debt or performance of an obligation, but the term does not include a security interest;
    19. “lot” means a parcel or a single article that is the subject matter of a separate lease or delivery, whether or not it is sufficient to perform the lease contract;
    20. “merchant lessee” means a lessee who is a merchant with respect to goods of the kind subject to the lease;
    21. “present value” means the amount as of a date certain of one or more sums payable in the future, discounted to the date certain; the discount is determined by the interest rate specified by the parties if the rate was not manifestly unreasonable at the time the transaction was entered into; otherwise, the discount is determined by a commercially reasonable rate that takes into account the facts and circumstances of each case at the time the transaction was entered into;
    22. “purchase” includes taking by sale, lease, mortgage, security interest, pledge, gift, or any other voluntary transaction creating an interest in goods;
    23. “sublease” means a lease of goods the right to possession and use of which was acquired by the lessor as a lessee under an existing lease;
    24. “supplier” means a person from whom a lessor buys or leases goods to be leased under a finance lease;
    25. “supply contract” means a contract under which a lessor buys or leases goods to be leased;
    26. “termination” occurs when either party under a power created by agreement or law puts an end to the lease contract otherwise than for default.
  2. Other definitions applying to this chapter and the sections in which they appear are:
    1. “accessions” in AS 45.12.310(a) ;
    2. “construction mortgage” in AS 45.12.309(j)(5) ;
    3. “encumbrance” in AS 45.12.309(j)(1) ;
    4. “fixture filing” in AS 45.12.309(j)(2) ;
    5. “fixtures” in AS 45.12.309(j)(3) ;
    6. “purchase money lease” in AS 45.12.309(j)(4) .
  3. The following definitions in AS 45.02 and AS 45.29 apply to this chapter:
    1. “account” (AS 45.29.102(a) );
    2. “between merchants” (AS 45.02.104(c) );
    3. “buyer” (AS 45.02.103(a)(1) );
    4. “chattel paper” (AS 45.29.102(a) );
    5. “consumer goods” (AS 45.29.102(a));
    6. “document” (AS 45.29.102(a));
    7. “entrusting” (AS 45.02.403(c) );
    8. “general intangible” (AS 45.29.102(a));
    9. [Repealed, § 113 ch 44 SLA 2009.]
    10. “instrument” (AS 45.29.102(a));
    11. “merchant” (AS 45.02.104(a) );
    12. “mortgage” (AS 45.29.102(a));
    13. “pursuant to a commitment” (AS 45.29.102(a));
    14. “receipt” (AS 45.02.103(a)(3) );
    15. “sale” (AS 45.02.106(a) );
    16. “sale on approval” (AS 45.02.326 );
    17. “sale or return” (AS 45.02.326 );
    18. “seller” (AS 45.02.103(a)(4) ).
  4. In addition, AS 45.01 contains general definitions and principles of construction and interpretation applicable throughout this chapter.

History. (§ 125 ch 35 SLA 1993; am § 24 ch 113 SLA 2000; am §§ 81, 82, 113 ch 44 SLA 2009)

Revisor’s notes. —

In 2006, (b)(4) was renumbered as (b)(5) and (b)(5) was renumbered as (b)(4) to maintain alphabetical order.

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)(1) and (a)(15), substituted “acquiring” for “receiving” preceding “goods or documents of title”; and repealed (c)(9), which read, “ ‘good faith’ (AS 45.02.103(a)(2) );”.

Sec. 45.12.104. Leases subject to other law.

  1. A lease, although subject to this chapter, is also subject to an applicable
    1. certificate of title statute of this state, including AS 28.10.201 ;
    2. certificate of title statute of another jurisdiction as provided in AS 45.12.105 ;
    3. consumer protection statute of this state, or final consumer protection decision of a court of this state existing on January 1, 1994; or
    4. provision of AS 36.30 (State Procurement Code).
  2. In case of conflict between this chapter, other than AS 45.12.105 , 45.12.304(c) , and 45.12.305(c) , and a statute or decision referred to in (a) of this section, the statute or decision controls.
  3. Failure to comply with an applicable law has only the effect specified in it.

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.105. Territorial application of article to goods covered by certificate of title.

Subject to the provisions of AS 45.12.304(c) and 45.12.305(c) , with respect to goods covered by a certificate of title issued under a statute of this state or of another jurisdiction, compliance and the effect of compliance or noncompliance with a certificate of title statute are governed by the law, including the conflict of laws rules, of the jurisdiction issuing the certificate until the earlier of

  1. surrender of the certificate; or
  2. four months after the goods are removed from that jurisdiction and after that date until a new certificate of title is issued by another jurisdiction.

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.106. Limitation on power of parties to consumer lease to choose applicable law and judicial forum.

  1. If the law chosen by the parties to a consumer lease is that of a jurisdiction other than a jurisdiction in which the lessee resides at the time the lease agreement becomes enforceable or within 30 days after that date or in which the goods are to be used, the choice is not enforceable.
  2. If the judicial forum chosen by the parties to a consumer lease is a forum that would not otherwise have jurisdiction over the lessee, the choice is not enforceable.

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.107. Waiver or renunciation of claim or right after default or breach.

A claim or right arising out of an alleged default or breach of warranty may be discharged in whole or in part without consideration by a written waiver or renunciation signed and delivered by the aggrieved party.

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.108. Unconscionability.

  1. If the court as a matter of law finds a lease contract or a clause of a lease contract to have been unconscionable at the time it was made, the court may refuse to enforce the lease contract, or it may enforce the remainder of the lease contract without the unconscionable clause, or it may so limit the application of an unconscionable clause as to avoid an unconscionable result.
  2. With respect to a consumer lease, if the court as a matter of law finds that a lease contract or a clause of a lease contract has been induced by unconscionable conduct or that unconscionable conduct has occurred in the collection of a claim arising from a lease contract, the court may grant appropriate relief.
  3. Before making a finding of unconscionability under (a) or (b) of this section, the court, on its own motion or that of a party, shall afford the parties a reasonable opportunity to present evidence as to the setting, purpose, and effect of the lease contract or clause of the contract, or of the conduct.
  4. Notwithstanding Rule 82, Alaska Rules of Civil Procedure, in an action in which the lessee claims unconscionability with respect to a consumer lease
    1. if the court finds unconscionability under (a) or (b) of this section, the court shall award reasonable attorney fees to the lessee;
    2. if the court does not find unconscionability and the lessee claiming unconscionability has brought or maintained an action the lessee knew to be groundless, the court shall award reasonable attorney fees to the party against whom the claim is made;
    3. in determining attorney fees, the amount of the recovery on behalf of the claimant under (a) and (b) of this section is not controlling.

History. (§ 125 ch 35 SLA 1993; am § 40 ch 22 SLA 2015)

Cross references. —

For effect of the enactment of (d) of this section on Alaska Rule of Civil Procedure 82, see § 130(b), ch. 35, SLA 1993 in the Temporary and Special Acts.

Effect of amendments. —

The 2015 amendment, effective July 1, 2015, in the introductory language in (d), substituted “Rule 82, Alaska Rules of Civil Procedure” for “Alaska Rule of Civil Procedure 82”.

Sec. 45.12.109. Option to accelerate at will.

  1. A term providing that one party or the party’s successor in interest may accelerate payment or performance or require collateral or additional collateral “at will” or “when the party considers itself insecure,” or in words of similar import, shall be construed to mean that the party has power to do so only if the party in good faith believes that the prospect of payment or performance is impaired.
  2. With respect to a consumer lease, the burden of establishing good faith under (a) of this section is on the party who exercised the power; otherwise the burden of establishing lack of good faith is on the party against whom the power has been exercised.

History. (§ 125 ch 35 SLA 1993)

Article 2. Formation and Construction of Lease Contract.

Sec. 45.12.201. Statute of frauds.

  1. A lease contract is not enforceable by way of action or defense unless
    1. the total payments to be made under the lease contract, excluding payments for options to renew or buy, are less than $1,000; or
    2. there is a writing, signed by the party against whom enforcement is sought or by that party’s authorized agent, sufficient to indicate that a lease contract has been made between the parties and to describe the goods leased and the lease term.
  2. A description of leased goods or of the lease term is sufficient and satisfies (a)(2) of this section, whether or not it is specific, if it reasonably identifies what is described.
  3. A writing is not insufficient because it omits or incorrectly states a term agreed upon, but the lease contract is not enforceable under (a)(2) of this section beyond the lease term and the quantity of goods shown in the writing.
  4. A lease 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 or obtained for the lessee and are not suitable for lease or sale to others in the ordinary course of the lessor’s business, and the lessor, before notice of repudiation is received and under circumstances that reasonably indicate that the goods are for the lessee, 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 that party’s pleading, testimony, or otherwise in court that a lease contract was made, but the lease contract is not enforceable under this paragraph beyond the quantity of goods admitted; or
    3. with respect to goods that have been received and accepted by the lessee.
  5. The lease term under a lease contract referred to in (d) of this section is
    1. if there is a writing signed by the party against whom enforcement is sought or by that party’s authorized agent specifying the lease term, the term specified;
    2. if the party against whom enforcement is sought admits in that party’s pleading, testimony, or otherwise in court a lease term, the term admitted; or
    3. a reasonable lease term.

History. (§ 125 ch 35 SLA 1993)

Collateral references. —

Specially manufactured goods statute of frauds exception in UCC § 2-201(3)(a), 45 ALR4th 1126.

Construction of statute of frauds exception under UCC § 2-201(2) for confirmatory writing between merchants, 82 ALR4th 709.

Sec. 45.12.202. 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 that are included in the memoranda or other 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 dealing or usage of trade or by course of performance; and
  2. by evidence of consistent additional terms unless the court finds the writing to have been intended also as a complete and exclusive statement of the terms of the agreement.

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.203. Seals inoperative.

The affixing of a seal to a writing evidencing a lease contract or an offer to enter into a lease contract does not render the writing a sealed instrument, and the law with respect to sealed instruments does not apply to the lease contract or offer.

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.204. Formation in general.

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

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.205. Firm offers.

An offer by a merchant to lease goods to or from another person 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; however, in no event may the period of irrevocability exceed three months. A term of assurance under this section on a form supplied by the offeree shall be separately signed by the offeror.

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.206. Offer and acceptance in formation of lease contract.

  1. Unless otherwise unambiguously indicated by the language or circumstances, an offer to make a lease contract must be construed as inviting acceptance in any manner and by any medium reasonable under the circumstances.
  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. (§ 125 ch 35 SLA 1993)

Sec. 45.12.207. Course of performance or practical construction. [Repealed, § 113 ch 44 SLA 2009.]

Sec. 45.12.208. Modification, rescission, and waiver.

  1. An agreement modifying a lease contract does not need consideration to be binding.
  2. A signed lease agreement that excludes modification or rescission except by a signed writing may not be otherwise modified or rescinded, but, except as between merchants, such a requirement on a form supplied by a merchant must be separately signed by the other party.
  3. Although an attempt at modification or rescission does not satisfy the requirements of (b) of this section, it may operate as a waiver.
  4. A party who has made a waiver affecting an executory portion of a lease 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. (§ 125 ch 35 SLA 1993)

Sec. 45.12.209. Lessee under finance lease as beneficiary of supply contract.

  1. The benefit of a supplier’s promises to the lessor under the supply contract and of all warranties, whether express or implied, including those of a third party provided in connection with or as part of the supply contract, extends to the lessee to the extent of the lessee’s leasehold interest under a finance lease related to the supply contract, but is subject to the terms of the warranty and of the supply contract and all defenses or claims arising from the warranty or supply contract.
  2. The extension of the benefit of a supplier’s promises and of warranties to the lessee under (a) of this section does not
    1. modify the rights and obligations of the parties to the supply contract, whether arising from it or otherwise; or
    2. impose a duty or liability under the supply contract on the lessee.
  3. A modification or rescission of the supply contract by the supplier and the lessor is effective between the supplier and the lessee unless, before the modification or rescission, the supplier has received notice that the lessee has entered into a finance lease related to the supply contract. If the modification or rescission is effective between the supplier and the lessee, the lessor is considered to have assumed, in addition to the obligations of the lessor under the lease contract, promises of the supplier to the lessor and warranties that were so modified or rescinded as they existed and were available to the lessee before modification or rescission.
  4. In addition to the extension of the benefit of the supplier’s promises and of warranties to the lessee under (a) of this section, the lessee retains all rights that the lessee may have against the supplier that arise from an agreement between the lessee and the supplier or under other law.

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.210. Express warranties.

  1. Express warranties by the lessor are created as follows:
    1. an affirmation of fact or promise made by the lessor to the lessee that relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods will 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 will 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 will conform to the sample or model.
  2. It is not necessary to the creation of an express warranty that the lessor use formal words, such as “warrant” or “guarantee,” or that the lessor 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 lessor’s opinion or commendation of the goods does not create a warranty.

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.211. Warranties against interference and against infringement; lessee’s obligation against infringement.

  1. There is in a lease contract a warranty that for the lease term a person does not hold a claim to or interest in the goods that arose from an act or omission of the lessor, other than a claim by way of infringement or the like, that will interfere with the lessee’s enjoyment of its leasehold interest.
  2. Except in a finance lease, there is in a lease contract by a lessor who is a merchant regularly dealing in goods of the kind a warranty that the goods are delivered free of the rightful claim of any person by way of infringement or the like.
  3. A lessee who furnishes specifications to a lessor or a supplier shall hold the lessor and the supplier harmless against any claim by way of infringement or the like that arises out of compliance with the specifications.

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.212. Implied warranty of merchantability.

  1. Except in a finance lease, a warranty that the goods will be merchantable is implied in a lease contract if the lessor is a merchant with respect to goods of that kind.
  2. Goods to be merchantable must be at least goods that
    1. pass without objection in the trade under the description in the lease agreement;
    2. in the case of fungible goods, are of fair average quality within the description;
    3. are fit for the ordinary purposes for which goods of that type are used;
    4. run, within the variation permitted by the lease agreement, of even kind, quality, and quantity within each unit and among all units involved;
    5. are adequately contained, packaged, and labeled as the lease agreement may require; and
    6. conform to any promises or affirmations of fact made on the container or label.
  3. Other implied warranties may arise from course of dealing or usage of trade.

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.213. Implied warranty of fitness for particular purpose.

Except in a finance lease, if the lessor at the time the lease contract is made has reason to know of a particular purpose for which the goods are required and that the lessee is relying on the lessor’s skill or judgment to select or furnish suitable goods, there is in the lease contract an implied warranty that the goods will be fit for that purpose.

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.214. 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 a warranty shall be construed wherever reasonable as consistent with each other; but, subject to the provisions of AS 45.12.202 on parol or extrinsic evidence, negation or limitation is inoperative to the extent that the construction is unreasonable.
  2. Subject to (c) of this section, to exclude or modify the implied warranty of merchantability or a part of it the language must mention “merchantability,” be by a writing, and be conspicuous. Subject to (c) of this section, to exclude or modify an implied warranty of fitness the exclusion must be by a writing and be conspicuous. Language to exclude all implied warranties of fitness is sufficient if it is in writing, is conspicuous, and states, for example, “There is no warranty that the goods will be fit for a particular purpose.”
  3. Notwithstanding (b) of this section, but subject to (d) of this section,
    1. unless the circumstances indicate otherwise, all implied warranties are excluded by expressions like “as is,” or “with all fault,” or by other language that in common understanding calls the lessee’s attention to the exclusion of warranties and makes plain that there is no implied warranty, if in writing and conspicuous;
    2. if the lessee before entering into the lease contract has examined the goods or the sample or model as fully as 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; and
    3. an implied warranty may also be excluded or modified by course of dealing, course of performance, or usage of trade.
  4. To exclude or modify a warranty against interference or against infringement described in AS 45.12.211 or a part of the warranty, the language must be specific, be by a writing, and be conspicuous, unless the circumstances, including course of performance, course of dealing, or usage of trade, give the lessee reason to know that the goods are being leased subject to a claim or interest of any person.

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.215. 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. express warranties displace inconsistent implied warranties other than an implied warranty of fitness for a particular purpose.

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.216. Third-party beneficiaries of express and implied warranties.

A warranty to or for the benefit of a lessee under this chapter, whether express or implied, extends to any natural person who may reasonably be expected to use, consume, or be affected by the goods and who is injured in person by breach of the warranty. This section does not displace principles of law and equity that extend a warranty to or for the benefit of a lessee to other persons. The operation of this section may not be excluded, modified, or limited, but an exclusion, modification, or limitation of the warranty, including an exclusion, a modification, or a limitation with respect to rights and remedies, effective against the lessee is also effective against the beneficiary designated under this section.

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.217. Identification.

Identification of goods as goods to which a lease contract refers may 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 lease contract is made if the lease contract is for a lease of goods that are existing and identified;
  2. when the goods are shipped, marked, or otherwise designated by the lessor as goods to which the lease contract refers if the lease contract is for a lease of goods that are not existing and identified; or
  3. when the young are conceived if the lease contract is for a lease of unborn young of animals.

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.218. Insurance and proceeds.

  1. A lessee obtains an insurable interest when existing goods are identified to the lease contract even though the goods identified are nonconforming and the lessee has an option to reject them.
  2. If a lessee has an insurable interest only by reason of the lessor’s identification of the goods, the lessor, until default or insolvency or notification to the lessee that identification is final, may substitute other goods for those identified.
  3. Notwithstanding a lessee’s insurable interest under (a) — (b) of this section, the lessor retains an insurable interest until an option to buy has been exercised by the lessee and risk of loss has passed to the lessee.
  4. This section does not impair an insurable interest recognized under another statute or rule of law.
  5. The parties by agreement may determine that one or more parties have an obligation to obtain and pay for insurance covering the goods and by agreement may determine the beneficiary of the proceeds of the insurance.

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.219. Risk of loss.

  1. Except in the case of a finance lease, risk of loss is retained by the lessor and does not pass to the lessee. In the case of a finance lease, risk of loss passes to the lessee.
  2. Subject to the provisions of AS 45.12.220 on the effect of default on risk of loss, if risk of loss is to pass to the lessee and the time of passage is not stated, the following rules apply:
    1. if the lease contract requires or authorizes the goods to be shipped by carrier
      1. and it does not require delivery at a particular destination, the risk of loss passes to the lessee when the goods are duly delivered to the carrier; but
      2. if it does require delivery 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 lessee when the goods are there duly so tendered as to enable the lessee to take delivery;
    2. if the goods are held by a bailee to be delivered without being moved, the risk of loss passes to the lessee on acknowledgment by the bailee of the lessee’s right to possession of the goods;
    3. in a case not covered in (1) or (2) of this subsection, the risk of loss passes to the lessee on the lessee’s receipt of the goods if the lessor, or, in the case of a finance lease, the supplier, is a merchant; otherwise the risk passes to the lessee on tender of delivery.

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.220. Effect of default on risk of loss.

  1. Where risk of loss is to pass to the lessee and the time of passage is not stated
    1. if a tender or delivery of goods so fails to conform to the lease contract as to give a right of rejection, the risk of their loss remains with the lessor, or, in the case of a finance lease, the supplier, until cure or acceptance;
    2. if the lessee rightfully revokes acceptance, the lessee, to the extent of a deficiency in the lessee’s effective insurance coverage, may treat the risk of loss as having remained with the lessor from the beginning.
  2. Whether or not risk of loss is to pass to the lessee, if the lessee as to conforming goods already identified to a lease contract repudiates or is otherwise in default under the lease contract, the lessor, or, in the case of a finance lease, the supplier, to the extent of a deficiency in the lessor’s or supplier’s effective insurance coverage may treat the risk of loss as resting on the lessee for a commercially reasonable time.

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.221. Casualty to identified goods.

If a lease contract requires goods identified when the lease contract is made, and the goods suffer casualty without fault of the lessee, the lessor, or the supplier before delivery, or the goods suffer casualty before risk of loss passes to the lessee under the lease agreement or AS 45.12.219 then, if the loss is

  1. total, the lease contract is avoided; and
  2. partial or the goods have so deteriorated as to no longer conform to the lease contract, the lessee may nevertheless demand inspection and at the lessee’s option either treat the lease contract as avoided or, except in a finance lease that is not a consumer lease, accept the goods with due allowance from the rent payable for the balance of the lease term for the deterioration or the deficiency in quantity but without further right against the lessor.

History. (§ 125 ch 35 SLA 1993)

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.

Article 3. Effect of Lease Contract.

Sec. 45.12.301. Enforceability of lease contract.

Except as otherwise provided in this chapter, a lease contract is effective and enforceable according to its terms between the parties, against purchasers of the goods, and against creditors of the parties.

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.302. Title to and possession of goods.

Except as otherwise provided in this chapter, each provision of this chapter applies whether the lessor or a third party has title to the goods, and whether the lessor, the lessee, or a third party has possession of the goods, notwithstanding a statute or rule of law that possession or the absence of possession is fraudulent.

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.303. Alienability of party’s interest under lease contract or of lessor’s residual interest in goods; delegation of performance; transfer of rights.

  1. Except as provided in (d) of this section and AS 45.29.407 , a provision in a lease agreement that does either of the following gives rise to the rights and remedies provided in (e) of this section, but a transfer that is prohibited or is an event of default under the lease agreement is otherwise effective:
    1. prohibits the voluntary or involuntary transfer, including a transfer by sale, sublease, creation or enforcement of a security interest, or attachment, levy, or other judicial process, of
      1. an interest of a party under the lease contract; or
      2. the lessor’s residual interest in the goods; or
    2. makes a transfer under (1) of this subsection an event of default.
  2. [Repealed, § 31 ch 113 SLA 2000.]
  3. [Repealed, § 31 ch 113 SLA 2000.]
  4. A provision in a lease agreement that does either of the following is not enforceable, and the transfer is not a transfer that materially impairs the prospect of obtaining return performance by, materially changes the duty of, or materially increases the burden or risk imposed on, the other party to the lease contract within the purview of (e) of this section:
    1. prohibits a transfer of a right to damages for default with respect to the whole lease contract or of a right to payment arising out of the transferor’s due performance of the transferor’s entire obligation; or
    2. makes a transfer under (1) of this subsection an event of default.
  5. Subject to (d) of this section and AS 45.29.407 ,
    1. if a transfer is made that is made an event of default under a lease agreement, the party to the lease contract not making the transfer, unless that party waives the default or otherwise agrees, has the rights and remedies under AS 45.12.501(b) ;
    2. if (1) of this subsection is not applicable and if a transfer is made that is prohibited under a lease agreement or that materially impairs the prospect of obtaining return performance by, materially changes the duty of, or materially increases the burden or risk imposed on, the other party to the lease contract, unless the party not making the transfer agrees at any time to the transfer in the lease contract or otherwise, then, except as limited by contract, the transferor is liable to the party not making the transfer for damages caused by the transfer to the extent that the damages could not reasonably be prevented by the party not making the transfer, and a court having jurisdiction may grant other appropriate relief, including cancellation of the lease contract or an injunction against the transfer.
  6. A transfer of “the lease” or of “all my rights under the lease,” or a transfer in similar general terms, is a transfer of rights, and, unless the language or the circumstances, as in a transfer for security, indicate the contrary, the transfer is a delegation of duties by the transferor to the transferee. Acceptance by the transferee constitutes a promise by the transferee to perform those duties. The promise is enforceable by either the transferor or the other party to the lease contract.
  7. Unless otherwise agreed by the lessor and the lessee, a delegation of performance does not relieve the transferor as against the other party of any duty to perform or any liability for default.
  8. In a consumer lease, to prohibit the transfer of an interest of a party under the lease contract or to make a transfer an event of default, the language must be specific, by a writing, and conspicuous.
  9. In this section, “creation of a security interest” includes the sale of a lease contract that is subject to AS 45.29, on secured transactions, by reason of AS 45.29.109(a)(3) .

History. (§ 125 ch 35 SLA 1993; am §§ 25 — 27, 31 ch 113 SLA 2000)

Sec. 45.12.304. Subsequent lease of goods by lessor.

  1. Subject to AS 45.12.303 , a subsequent lessee from a lessor of goods under an existing lease contract obtains, to the extent of the leasehold interest transferred, the leasehold interest in the goods that the lessor had or had power to transfer, and except as provided in (b) of this section and AS 45.12.527(d) , takes subject to the existing lease contract. A lessor with voidable title has power to transfer a good leasehold interest to a good faith subsequent lessee for value, but only to the extent set out in the preceding sentence. If goods have been delivered under a transaction of purchase, the lessor has that power even though
    1. the lessor’s transferor was deceived as to the identity of the lessor;
    2. the delivery was in exchange for a check that is 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 criminal law.
  2. A subsequent lessee in ordinary course of business from a lessor who is a merchant dealing in goods of that kind to whom the goods were entrusted by the existing lessee of that lessor before the interest of the subsequent lessee became enforceable against that lessor obtains, to the extent of the leasehold interest transferred, all of that lessor’s and the existing lessee’s rights to the goods, and takes free of the existing lease contract.
  3. A subsequent lessee from the lessor of goods that are subject to an existing lease contract and are covered by a certificate of title issued under a statute of this state or of another jurisdiction does not take greater rights than those provided both by this section and by the certificate of title statute. If the certificate of title statute is silent on the issue of transfer, this section controls.

History. (§ 125 ch 35 SLA 1993; am § 83 ch 44 SLA 2009)

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, in (b), deleted “the” preceding “ordinary course of business”.

Sec. 45.12.305. Sale or sublease of goods by lessee.

  1. Subject to the provisions of AS 45.12.303 , a buyer or sublessee from the lessee of goods under an existing lease contract obtains, to the extent of the interest transferred, the leasehold interest in the goods that the lessee had or had power to transfer, and except as provided in (b) of this section and AS 45.12.511(d) , takes subject to the existing lease contract. A lessee with a voidable leasehold interest has power to transfer a good leasehold interest to a good faith buyer for value or a good faith sublessee for value, but only to the extent set out in the preceding sentence. If goods have been delivered under a transaction of lease, the lessee has that power even though
    1. the lessor was deceived as to the identity of the lessee;
    2. the delivery was in exchange for a check that is later dishonored; or
    3. the delivery was procured through fraud punishable as larcenous under criminal law.
  2. A buyer in ordinary course of business or a sublessee in ordinary course of business from a lessee who is a merchant dealing in goods of that kind to whom the goods were entrusted by the lessor obtains, to the extent of the interest transferred, all of the lessor’s and lessee’s rights to the goods, and takes free of the existing lease contract.
  3. A buyer or sublessee from the lessee of goods that are subject to an existing lease contract and are covered by a certificate of title issued under a statute of this state or of another jurisdiction does not take greater rights than those provided both by this section and by the certificate of title statute.

History. (§ 125 ch 35 SLA 1993; am § 84 ch 44 SLA 2009)

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, in (b), deleted “the” preceding “ordinary course of business” twice.

Sec. 45.12.306. Priority of certain liens arising by operation of law.

If a person in the ordinary course of the person’s business furnishes services or materials with respect to goods subject to a lease contract, a lien upon those goods in the possession of that person given by statute or rule of law for those materials or services takes priority over any interest of the lessor or lessee under the lease contract or this chapter unless the lien is created by statute and the statute provides otherwise or unless the lien is created by rule of law and the rule of law provides otherwise.

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.307. Priority of liens arising by attachment or levy on, security interests in, and other claims to goods.

  1. Except as otherwise provided in AS 45.12.306 , a creditor of a lessee takes subject to the lease contract.
  2. Except as otherwise provided in (c) of this section and in AS 45.12.306 and 45.12.308 , a creditor of a lessor takes subject to the lease contract unless the creditor holds a lien that attached to the goods before the lease contract became enforceable.
  3. Except as otherwise provided in AS 45.29.317 , 45.29.321 , and 45.29.323 , a lessee takes a leasehold interest subject to a security interest held by a creditor of the lessor.
  4. [Repealed, § 31 ch 113 SLA 2000.]

History. (§ 125 ch 35 SLA 1993; am §§ 28, 29, 31 ch 113 SLA 2000)

Collateral references. —

Construction and effect of future advances clauses under UCC Article 9, 90 ALR4th 859.

Equitable estoppel of secured party’s right to assert prior perfected security interest against other creditor or subsequent purchaser under Article 9 of UCC, 9 ALR5th 708.

Sec. 45.12.308. Special rights of creditors.

  1. A creditor of a lessor in possession of goods subject to a lease contract may treat the lease contract as void if as against the creditor retention of possession by the lessor is fraudulent, but retention of possession in good faith and current course of trade by the lessor for a commercially reasonable time after the lease contract becomes enforceable is not fraudulent.
  2. Nothing in this chapter impairs the rights of creditors of a lessor if the lease contract
    1. becomes enforceable, not in current course of trade but in satisfaction of or as security for a preexisting claim for money, security, or the like; and
    2. is made under circumstances that under law apart from this chapter would constitute the transaction a fraudulent transfer or voidable preference.
  3. A creditor of a seller may treat a sale or an identification of goods to a contract for sale as void if as against the creditor retention of possession by the seller is fraudulent but retention of possession of the goods under a lease contract entered into by the seller as lessee and the buyer as lessor in connection with the sale or identification of the goods is not fraudulent if the buyer bought for value and in good faith.

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.309. Lessor’s and lessee’s rights when goods become fixtures.

  1. Under this chapter a lease may be of goods that are fixtures or may continue in goods that become fixtures, but a lease does not exist under this chapter of ordinary building materials incorporated into an improvement on land.
  2. This chapter does not prevent creation of a lease of fixtures under real estate law.
  3. The perfected interest of a lessor of fixtures has priority over a conflicting interest of an encumbrancer or owner of the real estate if
    1. the lease is a purchase money lease, the conflicting interest of the encumbrancer or owner arises before the goods become fixtures, the interest of the lessor is perfected by a fixture filing before the goods become fixtures or within 10 days after becoming fixtures, and the lessee has an interest of record in the real estate or is in possession of the real estate; or
    2. the interest of the lessor is perfected by a fixture filing before the interest of the encumbrancer or owner is of record, the lessor’s interest has priority over a conflicting interest of a predecessor in title of the encumbrancer or owner, and the lessee has an interest of record in the real estate or is in possession of the real estate.
  4. The interest of a lessor of fixtures, whether or not perfected, has priority over the conflicting interest of an encumbrancer or owner of the real estate if
    1. the fixtures are readily removable factory or office machines, readily removable equipment that is not primarily used or leased for use in the operation of the real estate, or readily removable replacements of domestic appliances that are goods subject to a consumer lease, and before the goods become fixtures the lease contract is enforceable;
    2. the conflicting interest is a lien on the real estate obtained by legal or equitable proceedings after the lease contract is enforceable;
    3. the encumbrancer or owner has consented in writing to the lease or has disclaimed an interest in the goods as fixtures; or
    4. the lessee has a right to remove the goods as against the encumbrancer or owner; if the lessee’s right to remove terminates, the priority of the interest of the lessor continues for a reasonable time.
  5. Notwithstanding (c)(1) of this section but otherwise subject to (c) and (d) of this section, the interest of a lessor of fixtures, including the lessor’s residual interest, is subordinate to the conflicting interest of an encumbrancer of the real estate under a construction mortgage recorded before the goods become fixtures if the goods become fixtures before the completion of the construction. To the extent given to refinance a construction mortgage, the conflicting interest of an encumbrancer of the real estate under a mortgage has this priority to the same extent as the encumbrancer of the real estate under the construction mortgage.
  6. In cases not within (a) — (e) of this section, priority between the interest of a lessor of fixtures, including the lessor’s residual interest, and the conflicting interest of an encumbrancer or owner of the real estate who is not the lessee is determined by the priority rules governing conflicting interests in real estate.
  7. Subject to (h) of this section, if the interest of a lessor of fixtures, including the lessor’s residual interest, has priority over all conflicting interests of all owners and encumbrances of the real estate, the lessor or the lessee may remove the goods from the real estate, free and clear of all conflicting interests of all owners and encumbrancers of the real estate, but the lessor or the lessee must reimburse an encumbrancer or owner of the real estate who is not the lessee and who has not otherwise agreed, for the cost of repair of physical injury, but not for a diminution in value of the real estate caused by the absence of the goods removed or by a necessity of replacing them. A person entitled to reimbursement may refuse permission to remove until the party seeking removal gives adequate security for the performance of this obligation.
  8. The lessor or the lessee may remove the goods under (g) of this section
    1. on default, expiration, termination, or cancellation of the lease agreement but subject to the lease agreement and this chapter; or
    2. if necessary to enforce other rights and remedies of the lessor or the lessee under this chapter.
  9. Even though the lease agreement does not create a security interest, the interest of a lessor of fixtures, including the lessor’s residual interest, is perfected by recording a financing statement as a fixture filing for leased goods that are or are to become fixtures under the relevant provisions of AS 45.29 on secured transactions.
  10. In this section,
    1. “encumbrance” includes real estate mortgages and other liens on real estate and all other rights in real estate that are not ownership interests;
    2. a “fixture filing” is the recording, in the office where a mortgage on the real estate would be recorded, of a financing statement covering goods that are or are to become fixtures and conforming to the requirements of AS 45.29.502(a) and (b);
    3. “fixtures” means goods that become so related to particular real estate that an interest in them arises under real estate law;
    4. a lease is a “purchase money lease” unless the lessee has possession or use of the goods or the right to possession or use of the goods before the lease agreement is enforceable; and
    5. a mortgage is a “construction mortgage” to the extent that it secures an obligation incurred for the construction of an improvement on land including the acquisition cost of the land if the recorded writing indicates.

History. (§ 125 ch 35 SLA 1993; am § 30 ch 113 SLA 2000)

Revisor’s notes. —

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

Collateral references. —

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

Equitable estoppel of secured party’s right to assert prior perfected security interest against other creditor or subsequent purchaser under Article 9 of UCC, 9 ALR5th 708.

Sec. 45.12.310. Lessor’s and lessee’s rights when goods become accessions.

  1. “Accessions” means goods when they are installed in or affixed to other goods.
  2. The interest of a lessor or a lessee under a lease contract entered into before the goods became accessions is superior to all interests in the whole except as stated in (d) of this section.
  3. The interest of a lessor or a lessee under a lease contract entered into at the time or after the goods became accessions is superior to all subsequently acquired interests in the whole except as stated in (d) of this section but is subordinate to interests in the whole existing at the time the lease contract was made unless the holders of those interests in the whole have in writing consented to the lease or disclaimed an interest in the goods as part of the whole.
  4. The interest of a lessor or a lessee under a lease contract described in (b) or (c) of this section is subordinate to the interest of
    1. a buyer in ordinary course of business or a lessee in ordinary course of business of an interest in the whole acquired after the goods became accessions; or
    2. a creditor with a security interest in the whole perfected before the lease contract was made to the extent that the creditor makes subsequent advances without knowledge of the lease contract.
  5. When under (b) or (c), and (d) of this section, and subject to (f) of this section, a lessor or a lessee of accessions holds an interest that is superior to all interests in the whole, the lessor or the lessee may remove the goods from the whole, free and clear of all interests in the whole, but the lessor or lessee must reimburse a holder of an interest in the whole who is not the lessee and who has not otherwise agreed, for the cost of repair of physical injury but not for a diminution in value of the whole caused by the absence of the goods removed or by a necessity for replacing them. A person entitled to reimbursement may refuse permission to remove until the party seeking removal gives adequate security for the performance of this obligation.
  6. The lessor or the lessee may remove the goods under (e) of this section
    1. on default, expiration, termination, or cancellation of the lease contract by the other party but subject to the provisions of the lease contract and this chapter; or
    2. if necessary to enforce other rights and remedies of the lessor or lessee under this chapter.

History. (§ 125 ch 35 SLA 1993; am § 85 ch 44 SLA 2009)

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, in (d)(1), deleted “the” preceding “ordinary course of business” twice, and substituted “an” for “any” preceding “interest in the whole”.

Collateral references. —

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

Sec. 45.12.311. Priority subject to subordination.

Nothing in this chapter prevents subordination by agreement by a person entitled to priority.

History. (§ 125 ch 35 SLA 1993)

Article 4. Performance of Lease Contract.

Sec. 45.12.401. Insecurity: adequate assurance of performance.

  1. A lease contract imposes an obligation on each party that the other’s expectation of receiving due performance will not be impaired.
  2. If reasonable grounds for insecurity arise with respect to the performance of either party, the insecure party may demand in writing adequate assurance of due performance. Until the insecure party receives that assurance, if commercially reasonable, the insecure party may suspend any performance for which the insecure party has not already received the agreed return.
  3. A repudiation of the lease contract occurs if assurance of due performance adequate under the circumstances of the particular case is not provided to the insecure party within a reasonable time, not to exceed 30 days after receipt of a demand by the other party.
  4. Between merchants, the reasonableness of grounds for insecurity and the adequacy of any assurance offered must be determined according to commercial standards.
  5. Acceptance of nonconforming delivery or payment does not prejudice the aggrieved party’s right to demand adequate assurance of future performance.

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.402. Anticipatory repudiation.

  1. If either party repudiates a lease contract with respect to a performance not yet due under the lease contract, the loss of which performance will substantially impair the value of the lease contract to the other, the aggrieved party may
    1. for a commercially reasonable time, await retraction of repudiation and performance by the repudiating party;
    2. make demand under AS 45.12.401 and await assurance of future performance adequate under the circumstances of the particular case; or
    3. resort to any right or remedy upon default under the lease contract or this chapter, even though the aggrieved party has notified the repudiating party that the aggrieved party would await the repudiating party’s performance and assurance and has urged retraction.
  2. In addition to pursuing the remedies in (a) of this section and whether or not the aggrieved party is pursuing one of the foregoing remedies, the aggrieved party may suspend performance or, if the aggrieved party is the lessor, proceed under the provisions of this chapter on the lessor’s right to identify goods to the lease contract notwithstanding default or to salvage unfinished goods under AS 45.12.524 .

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.403. Retraction of anticipatory repudiation.

  1. Until the repudiating party’s next performance is due, the repudiating party can retract the repudiation unless, since the repudiation, the aggrieved party has cancelled the lease contract 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 under the lease contract and includes any assurance demanded under AS 45.12.401 .
  3. Retraction reinstates a repudiating party’s rights under a lease contract with due excuse and allowance to the aggrieved party for any delay occasioned by the repudiation.

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.404. Substituted performance.

  1. If without fault of the lessee, the lessor, and the supplier, the agreed berthing, loading, or unloading facilities fail or the 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
    1. the lessor may withhold or stop delivery or cause the supplier to withhold or stop delivery unless the lessee provides a means or manner of payment that is commercially a substantial equivalent; and
    2. if delivery has already been taken, payment by the means or in the manner provided by the regulation discharges the lessee’s obligation unless the regulation is discriminatory, oppressive, or predatory.

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.405. Excused performance.

Subject to AS 45.12.404 on substituted performance, the following rules apply:

  1. delay in delivery or nondelivery in whole or in part by a lessor or a supplier who complies with (2) and (3) of this section is not a default under the lease contract 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 lease contract was made or by compliance in good faith with an applicable foreign or domestic governmental regulation or order, whether or not the regulation or order later proves to be invalid;
  2. if the causes mentioned in (1) of this section affect only part of the lessor’s or the supplier’s capacity to perform, the lessor or supplier shall allocate production and deliveries among the customers of the lessor or supplier but at the option of the lessor or supplier may include regular customers not then under contract for sale or lease as well as the requirements of the lessor or supplier for further manufacture; the lessor or supplier may allocate under this paragraph in a manner that is fair and reasonable;
  3. the lessor seasonably shall notify the lessee and in the case of a finance lease the supplier seasonably shall notify the lessor and the lessee, if known, that there will be delay or nondelivery and, if allocation is required under (2) of this section, of the estimated quota made available for the lessee.

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.406. Procedure on excused performance.

  1. If the lessee receives notification of a material or indefinite delay or an allocation justified under AS 45.12.405 , the lessee may by written notification to the lessor as to any goods involved, and with respect to all of the goods if under an installment lease contract the value of the whole lease contract is substantially impaired under AS 45.12.510 ,
    1. terminate the lease contract (AS 45.12.505(b) ); or
    2. except in a finance lease that is not a consumer lease, modify the lease contract by accepting the available quota in substitution, with due allowance from the rent payable for the balance of the lease term for the deficiency but without further right against the lessor.
  2. If, after receipt of a notification from the lessor under AS 45.12.405 , the lessee fails to modify the lease agreement as provided in (a)(2) of this section within a reasonable time not exceeding 30 days, the lease contract lapses with respect to deliveries affected.

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.407. Irrevocable promises: finance leases.

  1. In the case of a finance lease that is not a consumer lease, the lessee’s promises under the lease contract become irrevocable and independent upon the lessee’s acceptance of the goods.
  2. A promise that has become irrevocable and independent under (a) of this section
    1. is effective and enforceable between the parties, and by or against the third parties including assignees of the parties; and
    2. is not subject to cancellation, termination, modification, repudiation, excuse, or substitution without the consent of the party to whom the promise runs.
  3. This section does not affect the validity, under another law, of a covenant in a lease contract making the lessee’s promises irrevocable and independent upon the lessee’s acceptance of the goods.

History. (§ 125 ch 35 SLA 1993)

Article 5. Default.

Sec. 45.12.501. Default: procedure.

  1. Whether the lessor or the lessee is in default under a lease contract is determined by the lease agreement and this chapter.
  2. If the lessor or the lessee is in default under the lease contract, the party seeking enforcement has rights and remedies as provided in this chapter and, except as limited by this chapter, as provided in the lease agreement.
  3. If the lessor or the lessee is in default under the lease contract, the party seeking enforcement may reduce the party’s claim to judgment, or otherwise enforce the lease contract by self-help or any available judicial procedure or nonjudicial procedure, including administrative proceeding, arbitration, or the like, under this chapter.
  4. Except as otherwise provided in AS 45.01.305(a) or this chapter or the lease agreement, the rights and remedies referred to in (b) and (c) of this section are cumulative.
  5. If the lease agreement covers both real property and goods, the party seeking enforcement may proceed under AS 45.12.501 45.12.532 as to the goods, or under other applicable law as to both the real property and the goods in accordance with that party’s rights and remedies in respect of the real property, in which case AS 45.12.501 45.12.532 do not apply.

History. (§ 125 ch 35 SLA 1993; am § 86 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), substituted “AS 45.01.305(a) ” for “AS 45.01.106(a)”.

Sec. 45.12.502. Notice after default.

Except as otherwise provided in this chapter or the lease agreement, the lessor or lessee in default under the lease contract is not entitled to notice of default or notice of enforcement from the other party to the lease agreement.

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.503. Modification or impairment of rights and remedies.

  1. Except as otherwise provided in this chapter, the lease agreement may include rights and remedies for default 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.
  2. Resort to a remedy provided under this chapter or in the lease agreement is optional unless the remedy is expressly agreed to be exclusive. If circumstances cause an exclusive or limited remedy to fail of its essential purpose, or provision for an exclusive remedy is unconscionable, remedy may be had as provided in this chapter.
  3. Consequential damages may be liquidated under AS 45.12.504 , or may otherwise be limited, altered, or excluded unless the limitation, alteration, or exclusion is unconscionable. Limitation, alteration, or exclusion of consequential damages for injury to the person in the case of consumer goods is prima facie unconscionable but limitation, alteration, or exclusion of damages where the loss is commercial is not prima facie unconscionable.
  4. Rights and remedies on default by the lessor or the lessee with respect to an obligation or a promise collateral or ancillary to the lease contract are not impaired by this chapter.

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.504. Liquidation of damages.

  1. Damages payable by either party for default, or another act or omission, including indemnity for loss or diminution of anticipated tax benefits or loss or damage to lessor’s residual interest, may be liquidated in the lease agreement but only at an amount or by a formula that is reasonable in light of the then anticipated harm caused by the default or other act or omission.
  2. If the lease agreement provides for liquidation of damages, and the provision does not comply with (a) of this section, or the provision is an exclusive or limited remedy that circumstances cause to fail of its essential purpose, remedy may be had as provided in this chapter.
  3. If the lessor justifiably withholds or stops delivery of goods under AS 45.12.525 or 45.12.526 because of the lessee’s default or insolvency, the lessee is entitled to restitution of any amount by which the sum of the lessee’s payments exceeds
    1. the amount to which the lessor is entitled by virtue of terms liquidating the lessor’s damages under (a) of this section; or
    2. in the absence of the terms under (1) of this subsection, 20 percent of the then present value of the total rent the lessee was obligated to pay for the balance of the lease term, or, in the case of a consumer lease, the lesser of that amount or $500.
  4. A lessee’s right to restitution under (c) of this section is subject to offset to the extent the lessor establishes
    1. a right to recover damages under the provisions of this chapter other than (a) of this section; and
    2. the amount or value of any benefits received by the lessee directly or indirectly by reason of the lease contract.

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.505. Cancellation and termination, and effect of cancellation, termination, rescission, or fraud on rights and remedies.

  1. On cancellation of the lease contract, all obligations that are still executory on both sides are discharged, but any right based on prior default or performance survives, and the canceling party also retains a remedy for default of the whole lease contract or an unperformed balance.
  2. On termination of the lease contract, all obligations that are still executory on both sides are discharged but a right based on prior default or performance survives.
  3. Unless the contrary intention clearly appears, expressions of “cancellation,” “rescission,” or the like of the lease contract may not be construed as a renunciation or discharge of a claim in damages for an antecedent default.
  4. Rights and remedies for material misrepresentation or fraud include all rights and remedies available under this chapter for default.
  5. Neither rescission nor a claim for rescission of the lease contract nor rejection or return of the goods bars or is inconsistent with a claim for damages or other right or remedy.

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.506. Statute of limitations.

  1. An action for default under a lease contract, including breach of warranty or indemnity, must be commenced within four years after the cause of action accrued. By the original lease contract the parties may reduce the period of limitation to not less than one year.
  2. A cause of action for default accrues when the act or omission on which the default or breach of warranty is based is or should have been discovered by the aggrieved party, or when the default occurs, whichever is later. A cause of action for indemnity accrues when the act or omission on which the claim for indemnity is based is or should have been discovered by the indemnified party, whichever is later.
  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 default or breach of warranty or indemnity, 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.

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.507. Proof of market rent: time and place.

  1. Damages based on market rent under AS 45.12.519 or 45.12.528 are determined according to the rent for the use of the goods concerned for a lease term identical to the remaining lease term of the original lease agreement and prevailing at the times specified in AS 45.12.519 or 45.12.528 , as appropriate.
  2. If evidence of rent for the use of the goods concerned for a lease term identical to the remaining lease term of the original lease agreement and prevailing at the times or places described in this chapter is not readily available, the rent prevailing within any reasonable time before or after the time described or at any other place or for a different lease term that in commercial judgment or under usage of trade would serve as a reasonable substitute for the one described may be used, making proper allowance for the difference, including the cost of transporting the goods to or from the other place.
  3. Evidence of a relevant rent prevailing at a time or place or for a lease term 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.
  4. If the prevailing rent or value of goods regularly leased in an established market is in issue, reports in official publications or trade journals or in newspapers or periodicals of general circulation published as the reports of that market are admissible in evidence. The circumstances of the preparation of the report may be shown to affect its weight but not its admissibility.

History. (§ 125 ch 35 SLA 1993)

Cross references. —

For effect of the enactment of (c) of this section on Alaska Rule of Evidence 402, see § 130(c), ch. 35, SLA 1993 in the Temporary and Special Acts.

Sec. 45.12.508. Lessee’s remedies.

  1. If a lessor fails to deliver the goods in conformity with the lease contract (AS 45.12.509 ) or repudiates the lease contract (AS 45.12.402 ), or a lessee rightfully rejects the goods (AS 45.12.509 ) or justifiably revokes acceptance of the goods under AS 45.12.517 , then with respect to the goods involved, and with respect to all of the goods if under an installment lease contract, the value of the whole lease contract is substantially impaired (AS 45.12.510 ), the lessor is in default under the lease contract and the lessee may
    1. cancel the lease contract under AS 45.12.505(a) ;
    2. recover as much of the rent and security as has been paid and as is just under the circumstances;
    3. cover and recover damages under AS 45.12.518 and 45.12.520 as to all goods affected whether or not they have been identified to the lease contract, or recover damages for nondelivery under AS 45.12.519 and 45.12.520 ;
    4. exercise other rights or pursue other remedies provided in the lease contract.
  2. If a lessor fails to deliver the goods in conformity to the lease contract or repudiates the lease contract, the lessee may also
    1. if the goods have been identified, recover them under AS 45.12.522 ; or
    2. in a proper case, obtain specific performance or replevy the goods under AS 45.12.521 .
  3. If a lessor is otherwise in default under a lease contract, the lessee may exercise the rights and pursue the remedies provided in the lease contract, which may include a right to cancel the lease, and AS 45.12.519(c) .
  4. If a lessor has breached a warranty, whether express or implied, the lessee may recover damages under AS 45.12.519(d) .
  5. On rightful rejection or justifiable revocation of acceptance, a lessee has a security interest in goods in the lessee’s possession or control for any rent and security that has been paid and any expenses reasonably incurred in their inspection, receipt, transportation, and care and custody, and may hold those goods and dispose of them in good faith and in a commercially reasonable manner, subject to AS 45.12.527(e) .
  6. Subject to AS 45.12.407 , a lessee, on notifying the lessor of the lessee’s intention to do so, may deduct all or part of the damages resulting from a default under the lease contract from a part of the rent still due under the same lease contract.

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.509. Lessee’s rights on improper delivery; rightful rejection.

  1. Subject to the provisions of AS 45.12.510 on default in installment lease contracts, if the goods or the tender or delivery fail in any respect to conform to the lease contract, the lessee may reject or accept the goods or accept any commercial unit or units and reject the rest of the goods.
  2. Rejection of goods is ineffective unless it is within a reasonable time after tender or delivery of the goods and the lessee seasonably notifies the lessor.

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.510. Installment lease contracts: rejection and default.

  1. Under an installment lease contract a lessee may reject a delivery that is nonconforming if the nonconformity substantially impairs the value of that delivery and cannot be cured or the nonconformity is a defect in the required documents; but if the nonconformity does not fall within (b) of this section and the lessor or the supplier gives adequate assurance of its cure, the lessee must accept that delivery.
  2. If nonconformity or default with respect to one or more deliveries substantially impairs the value of the installment lease contract as a whole, there is a default with respect to the whole. The aggrieved party reinstates the installment lease contract as a whole if the aggrieved party accepts a nonconforming delivery without seasonably notifying of cancellation or brings an action with respect only to past deliveries or demands performance as to future deliveries.

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.511. Merchant lessee’s duties as to rightfully rejected goods.

  1. Subject to a security interest of a lessee under AS 45.12.508(e) , if a lessor or a supplier does not have an agent or place of business at the market of rejection, a merchant lessee, after rejection of goods in the lessee’s possession or control, shall follow any reasonable instructions received from the lessor or the supplier with respect to the goods. In the absence of those instructions, a merchant lessee shall make reasonable efforts to sell, lease, or otherwise dispose of the goods for the lessor’s account if they threaten to decline in value speedily. Instructions are not reasonable if on demand indemnity for expenses is not forthcoming.
  2. If a merchant lessee under (a) of this section or another lessee disposes of goods under AS 45.12.512 , the lessee is entitled to reimbursement either from the lessor or the supplier or out of the proceeds for reasonable expenses of caring for and disposing of the goods and, if the expenses do not include a disposition commission, to the commission as is usual in the trade, or if there is none, to a reasonable sum not exceeding 10 percent of the gross proceeds.
  3. In complying with this section or AS 45.12.512 , the lessee is held only to good faith. Good faith conduct under this provision is neither acceptance or conversion nor the basis of an action for damages.
  4. A purchaser who purchases in good faith from a lessee under this section or AS 45.12.512 takes the goods free of any rights of the lessor and the supplier even though the lessee fails to comply with one or more of the requirements of this chapter.

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.512. Lessee’s duties as to rightfully rejected goods.

  1. Except as otherwise provided under AS 45.12.511 , with respect to goods that threaten to decline in value speedily and subject to a security interest of a lessee under AS 45.12.508(e) ,
    1. the lessee, after rejection of goods in the lessee’s possession, shall hold them with reasonable care at the lessor’s or the supplier’s disposition for a reasonable time after the lessee’s seasonable notification of rejection;
    2. if the lessor or the supplier does not give instructions within a reasonable time after notification of rejection, the lessee may store the rejected goods for the lessor’s or the supplier’s account or ship them to the lessor or the supplier or dispose of them for the lessor’s or the supplier’s account with reimbursement in the manner provided in AS 45.12.511 ; but
    3. the lessee does not have further obligations with regard to goods rightfully rejected.
  2. Action by the lessee under (a) of this section is not acceptance or conversion.

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.513. Cure by lessor of improper tender or delivery; replacement.

  1. If a tender or delivery by the lessor or the supplier is rejected because it is nonconforming and the time for performance has not yet expired, the lessor or the supplier may seasonably notify the lessee of the lessor’s or the supplier’s intention to cure and may then make a conforming delivery within the time provided in the lease contract.
  2. If the lessee rejects a nonconforming tender that the lessor or the supplier had reasonable grounds to believe would be acceptable with or without money allowance, the lessor or the supplier may have a further reasonable time to substitute a conforming tender if the lessor or supplier seasonably notifies the lessee.

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.514. Waiver of lessee’s objections.

  1. In rejecting goods, a lessee’s failure to state a particular defect that is ascertainable by reasonable inspection precludes the lessee from relying on the defect to justify rejection or to establish default
    1. if, stated seasonably, the lessor or the supplier could have cured it under AS 45.12.513 ; or
    2. between merchants if the lessor or the supplier after rejection has made a request in writing for a full and final written statement of all defects on which the lessee proposes to rely.
  2. A lessee’s failure to reserve rights when paying rent or other consideration against documents precludes recovery of the payment for defects apparent in the documents.

History. (§ 125 ch 35 SLA 1993; am § 87 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 “apparent in the documents” for “apparent on the face of the documents”.

Sec. 45.12.515. Acceptance of goods.

  1. Acceptance of goods occurs after the lessee has had a reasonable opportunity to inspect the goods and
    1. the lessee signifies or acts with respect to the goods in a manner that signifies to the lessor or the supplier that the goods are conforming or that the lessee will take or retain them in spite of their nonconformity; or
    2. the lessee fails to make an effective rejection of the goods under AS 45.12.509(b) .
  2. Acceptance of a part of a commercial unit is acceptance of that entire unit.

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.516. Effect of acceptance of goods; notice of default; burden of establishing default after acceptance; notice of claim or litigation to person answerable over.

  1. A lessee must pay rent for goods accepted in accordance with the lease contract, with due allowance for goods rightfully rejected or not delivered.
  2. A lessee’s acceptance of goods precludes rejection of the goods accepted. In the case of a finance lease, if made with knowledge of a nonconformity, acceptance cannot be revoked because of it. In any other case, if made with knowledge of a nonconformity, acceptance cannot be revoked because of it unless the acceptance was on the reasonable assumption that the nonconformity would be seasonably cured. Acceptance does not of itself impair another remedy provided by this chapter or the lease agreement for nonconformity.
  3. If a tender has been accepted
    1. within a reasonable time after the lessee discovers or should have discovered a default, the lessee shall notify the lessor and the supplier, if any, or be barred from a remedy against the party not notified;
    2. except in the case of a consumer lease, within a reasonable time after the lessee receives notice of litigation for infringement or the like under AS 45.12.211 the lessee shall notify the lessor or be barred from a remedy over for liability established by the litigation; and
    3. the burden is on the lessee to establish a default.
  4. If a lessee is sued for breach of a warranty or other obligation for which a lessor or a supplier is answerable over, the following apply:
    1. the lessee may give the lessor or the supplier, or both, written notice of the litigation; if the notice states that the person notified may come in and defend and that if the person notified does not do so that person will be bound in an action against that person by the lessee by a determination of fact common to the two litigations, then unless the person notified after seasonable receipt of the notice does come in and defend that person is so bound;
    2. the lessor or the supplier may demand in writing that the lessee turn over control of the litigation including settlement if the claim is one for infringement or the like under AS 45.12.211 or else be barred from a remedy over; if the demand states that the lessor or the supplier agrees to bear all expense and to satisfy an adverse judgment, then, unless the lessee after seasonable receipt of the demand does turn over control, the lessee is so barred.
  5. Subsections (c) and (d) of this section apply to an obligation of a lessee to hold the lessor or the supplier harmless against infringement or the like under AS 45.12.211 .

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.517. Revocation of acceptance of goods.

  1. A lessee may revoke acceptance of a lot or commercial unit whose nonconformity substantially impairs its value to the lessee if the lessee has accepted it,
    1. except in the case of a finance lease, 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 lessee’s acceptance was reasonably induced either by the lessor’s assurances or, except in the case of a finance lease, by the difficulty of discovery before acceptance.
  2. Except in the case of a finance lease that is not a consumer lease, a lessee may revoke acceptance of a lot or commercial unit if the lessor defaults under the lease contract and the default substantially impairs the value of that lot or commercial unit to the lessee.
  3. If the lease agreement provides, the lessee may revoke acceptance of a lot or commercial unit because of other defaults by the lessor.
  4. Revocation of acceptance must occur within a reasonable time after the lessee discovers or should have discovered the ground for it and before a substantial change in condition of the goods that is not caused by the nonconformity. Revocation is not effective until the lessee notifies the lessor.
  5. A lessee who revokes under this section has the same rights and duties with regard to the goods involved as if the lessee had rejected them.

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.518. Cover; substitute goods.

  1. After a default, by a lessor under the lease contract, of the type described in AS 45.12.508(a) , or, if agreed, after other default by the lessor, the lessee may cover by making a purchase or lease of or contract to purchase or lease goods in substitution for those due from the lessor.
  2. Except as otherwise provided under AS 45.12.504 with respect to damages liquidated in the lease agreement or otherwise determined under agreement of the parties under AS 45.01.302 and AS 45.12.503 , if a lessee’s cover is by lease agreement substantially similar to the original lease agreement and the new lease agreement is made in good faith and in a commercially reasonable manner, the lessee may recover from the lessor as damages
    1. the present value, as of the date of the commencement of the term of the new lease agreement, of the rent under the new lease agreement applicable to that period of the new lease term that is comparable to the then remaining term of the original lease agreement minus the present value as of the same date of the total rent for the then remaining lease term of the original lease agreement; and
    2. incidental or consequential damages, less expenses saved in consequence of the lessor’s default.
  3. If a lessee’s cover is by lease agreement that for any reason does not qualify for treatment under (b) of this section, or is by purchase or otherwise, the lessee may recover from the lessor as if the lessee had elected not to cover and AS 45.12.519 governs.

History. (§ 125 ch 35 SLA 1993; am § 88 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 (b), substituted “AS 45.01.302 ” for “AS 45.01.102(c)”.

Sec. 45.12.519. Lessee’s damages for nondelivery, repudiation, default, and breach of warranty in regard to accepted goods.

  1. Except as otherwise provided under AS 45.12.504 with respect to damages liquidated in the lease agreement or otherwise determined under agreement of the parties under AS 45.01.302 and AS 45.12.503 , if a lessee elects not to cover or a lessee elects to cover and the cover is by lease agreement that for any reason does not qualify for treatment under AS 45.12.518(b) , or is by purchase or otherwise, the measure of damages for nondelivery or repudiation by the lessor or for rejection or revocation of acceptance by the lessee is the present value, as of the date of the default, of the then market rent minus the present value as of the same date of the original rent, computed for the remaining lease term of the original lease agreement, together with incidental and consequential damages, less expenses saved in consequence of the lessor’s default.
  2. Market rent 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.
  3. Except as otherwise agreed, if the lessee has accepted goods and given notification under AS 45.12.516(c) , the measure of damages for non-conforming tender or delivery or other default by a lessor is the loss resulting in the ordinary course of events from the lessor’s default as determined in any manner that is reasonable together with incidental and consequential damages, less expenses saved in consequence of the lessor’s default.
  4. Except as otherwise agreed, the measure of damages for breach of warranty is the present value at the time and place of acceptance of the difference between the value of the use of the goods accepted and the value if they had been as warranted for the lease term, unless special circumstances show proximate damages of a different amount, together with incidental and consequential damages, less expenses saved in consequence of the lessor’s default or breach of warranty.

History. (§ 125 ch 35 SLA 1993; am § 89 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), substituted “AS 45.01.302 ” for “AS 45.01.102(c)”.

Sec. 45.12.520. Lessee’s incidental and consequential damages.

  1. Incidental damages resulting from a lessor’s default include expenses reasonably incurred in inspection, receipt, transportation, and care and custody of goods rightfully rejected or goods the acceptance of which is justifiably revoked, any commercially reasonable charges, expenses, or commissions in connection with effecting cover, and any other reasonable expense incident to the default.
  2. Consequential damages resulting from a lessor’s default include
    1. any loss resulting from general or particular requirements and needs of which the lessor 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. (§ 125 ch 35 SLA 1993)

Sec. 45.12.521. Lessee’s right to specific performance or replevin.

  1. Specific performance may be decreed if the goods are unique or in other proper circumstances.
  2. A decree for specific performance may include any terms and conditions as to payment of the rent, damages, or other relief that the court considers just.
  3. A lessee has a right of replevin, detinue, sequestration, claim and delivery, or the like for goods identified to the lease contract if after reasonable effort the lessee is unable to effect cover for those goods or the circumstances reasonably indicate that the effort will be unavailing.

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.522. Lessee’s right to goods on lessor’s insolvency.

  1. Subject to (b) of this section and even though the goods have not been shipped, a lessee who has paid a part or all of the rent and security for goods identified to a lease contract under AS 45.12.217 on making and keeping good a tender of any unpaid portion of the rent and security due under the lease contract may recover the goods identified from the lessor if the lessor becomes insolvent within 10 days after receipt of the first installment of rent and security.
  2. A lessee acquires the right to recover goods identified to a lease contract only if they conform to the lease contract.

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.523. Lessor’s remedies.

  1. If a lessee wrongfully rejects or revokes acceptance of goods or fails to make a payment when due or repudiates with respect to a part or the whole, then, with respect to the goods involved, and with respect to all of the goods if under an installment lease contract the value of the whole lease contract is substantially impaired (AS 45.12.510 ), the lessee is in default under the lease contract and the lessor may
    1. cancel the lease contract (AS 45.12.505(a) );
    2. proceed respecting goods not identified to the lease contract under AS 45.12.524 ;
    3. withhold delivery of the goods and under AS 45.12.525 take possession of goods previously delivered;
    4. stop delivery of the goods by a bailee under AS 45.12.526 ;
    5. dispose of the goods under AS 45.12.527 and recover damages, or retain the goods and recover damages under AS 45.12.528 , or in a proper case recover rent under AS 45.12.529 ;
    6. exercise any other rights or pursue any other remedies provided in the lease contract.
  2. If a lessor does not fully exercise a right or obtain a remedy to which the lessor is entitled under (a) of this section, the lessor may recover the loss resulting in the ordinary course of events from the lessee’s default as determined in any reasonable manner, together with incidental damages, less expenses saved in consequence of the lessee’s default.
  3. If a lessee is otherwise in default under a lease contract, the lessor may exercise the rights and pursue the remedies provided in the lease contract, which may include a right to cancel the lease. In addition, unless otherwise provided in the lease contract,
    1. if the default substantially impairs the value of the lease contract to the lessor, the lessor may exercise the rights and pursue the remedies provided in (a) or (b) of this section; or
    2. if the default does not substantially impair the value of the lease contract to the lessor, the lessor may recover as provided in (b) of this section.

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.524. Lessor’s right to identify goods to lease contract.

  1. After default, by the lessee under the lease contract, of the type described in AS 45.12.523(a) or (c)(1) or, if agreed, after other default by the lessee, the lessor may
    1. identify to the lease contract conforming goods not already identified if at the time the lessor learned of the default they were in the lessor’s or the supplier’s possession or control; and
    2. dispose of goods under AS 45.12.527(a) that demonstrably have been intended for the particular lease contract even though those goods are unfinished.
  2. If the goods are unfinished, in the exercise of reasonable commercial judgment for the purposes of avoiding loss and of effective realization, an aggrieved lessor or the supplier may either complete manufacture and wholly identify the goods to the lease contract or cease manufacture and lease, sell, or otherwise dispose of the goods for scrap or salvage value or proceed in another reasonable manner.

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.525. Lessor’s right to possession of goods.

  1. If a lessor discovers the lessee to be insolvent, the lessor may refuse to deliver the goods.
  2. After a default, by the lessee under the lease contract, of the type described in AS 45.12.523(a) or (c)(1), or, if agreed, after other default by the lessee, the lessor has the right to take possession of the goods. If the lease contract provides, the lessor may require the lessee to assemble the goods and make them available to the lessor at a place to be designated by the lessor that is reasonably convenient to both parties. Without removal, the lessor may render unusable any goods employed in trade or business, and may dispose of goods on the lessee’s premises under AS 45.12.527 .
  3. The lessor may proceed under (b) of this section without judicial process if it can be done without breach of the peace, or the lessor may proceed by action.

History. (§ 125 ch 35 SLA 1993)

Collateral references. —

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

Sec. 45.12.526. Lessor’s stoppage of delivery in transit or otherwise.

  1. A lessor may stop delivery of goods in the possession of a carrier or other bailee if the lessor discovers the lessee to be insolvent and may stop delivery of carload, truckload, planeload, or larger shipments of express or freight if the lessee repudiates or fails to make a payment due before delivery, whether for rent, security, or otherwise under the lease contract, or for any other reason the lessor has a right to withhold or take possession of the goods.
  2. In pursuing its remedies under (a) of this section, the lessor may stop delivery until
    1. receipt of the goods by the lessee;
    2. acknowledgment to the lessee by a bailee of the goods, except a carrier, that the bailee holds the goods for the lessee; or
    3. an acknowledgment to the lessee under (1) or (2) of this subsection by a carrier by reshipment or as a warehouse.
  3. To stop delivery, a lessor shall so notify as to enable the bailee by reasonable diligence to prevent delivery of the goods.
  4. After notification, the bailee shall hold and deliver the goods according to the directions of the lessor, but the lessor is liable to the bailee for any ensuing charges or damages.
  5. 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. (§ 125 ch 35 SLA 1993; am § 90 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, “such an acknowledgment to the lessee by a carrier via reshipment or as warehouseman.”

Sec. 45.12.527. Lessor’s rights to dispose of goods.

  1. After a default, by a lessee under the lease contract, of the type described in AS 45.12.523(a) or (c)(1) or after the lessor refuses to deliver or takes possession of goods under AS 45.12.525 or 45.12.526 , or, if agreed, after other default by a lessee, the lessor may dispose of the goods concerned or the undelivered balance of them by lease, sale, or otherwise.
  2. Except as otherwise provided with respect to damages liquidated in the lease agreement under AS 45.12.504 or otherwise determined under agreement of the parties under AS 45.01.302 and AS 45.12.503 , if the disposition is by lease agreement substantially similar to the original lease agreement and the new lease agreement is made in good faith and in a commercially reasonable manner, the lessor may recover from the lessee as damages
    1. accrued and unpaid rent as of the date of the commencement of the term of the new lease agreement;
    2. the present value, as of the same date, of the total rent for the then remaining lease term of the original lease agreement minus the present value, as of the same date, of the rent under the new lease agreement applicable to that period of the new lease term that is comparable to the then remaining term of the original lease agreement; and
    3. incidental damages allowed under AS 45.12.530 , less expenses saved in consequence of the lessee’s default.
  3. If the lessor’s disposition is by lease agreement that for any reason does not qualify for treatment under (b) of this section, or is by sale or otherwise, the lessor may recover from the lessee as if the lessor had elected not to dispose of the goods and AS 45.12.528 governs.
  4. A subsequent buyer or lessee who buys or leases from the lessor in good faith for value as a result of a disposition under this section takes the goods free of the original lease contract and any rights of the original lessee even though the lessor fails to comply with one or more of the requirements of this chapter.
  5. The lessor is not accountable to the lessee for profit made on a disposition. A lessee who has rightfully rejected or justifiably revoked acceptance shall account to the lessor for any excess over the amount of the lessee’s security interest under AS 45.12.508(e) .

History. (§ 125 ch 35 SLA 1993; am § 91 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 (b), substituted “AS 45.01.302 ” for “AS 45.01.102(c)”; in (b)(3), deleted “any” preceding “incidental damages allowed”.

Sec. 45.12.528. Lessor’s damages for nonacceptance, failure to pay, repudiation, or other default.

  1. Except as otherwise provided with respect to damages liquidated in the lease agreement under AS 45.12.504 or otherwise determined under agreement of the parties under AS 45.01.302 and AS 45.12.503 , if a lessor elects to retain the goods or a lessor elects to dispose of the goods and the disposition is by lease agreement that for any reason does not qualify for treatment under AS 45.12.527(b) , or is by sale or otherwise, the lessor may recover from the lessee as damages for a default described in AS 45.12.523(a) or (c)(1), or, if agreed, for other default of the lessee
    1. accrued and unpaid rent as of the date of default if the lessee has never taken possession of the goods, or, if the lessee has taken possession of the goods, as of the date the lessor repossesses the goods or an earlier date on which the lessee makes a tender of the goods to the lessor;
    2. the present value as of the date determined under (1) of this subsection of the total rent for the then remaining lease term of the original lease agreement minus the present value as of the same date of the market rent at the place where the goods are located, computed for the same lease term; and
    3. incidental damages allowed under AS 45.12.530 , less expenses saved in consequence of the lessee’s default.
  2. If the measure of damages provided in (a) of this section is inadequate to put a lessor in as good a position as performance would have, the measure of damages is the present value of the profit, including reasonable overhead, the lessor would have made from full performance by the lessee, together with any incidental damages allowed under AS 45.12.530 , due allowance for costs reasonably incurred, and due credit for payments or proceeds of disposition.

History. (§ 125 ch 35 SLA 1993; am § 92 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 45.01.302 ” for “AS 45.01.102(c)”; in (a)(3), deleted “any” preceding “incidental damages allowed”.

Sec. 45.12.529. Lessor’s action for the rent.

  1. After default, by the lessee under the lease contract, of the type described in AS 45.12.523(a) or (c)(1) or, if agreed, after other default by the lessee, if the lessor complies with (b) of this section, the lessor may recover from the lessee as damages
    1. for goods accepted by the lessee and not repossessed by or tendered to the lessor, and for conforming goods lost or damaged within a commercially reasonable time after risk of loss passes to the lessee under AS 45.12.219
      1. accrued and unpaid rent as of the date of entry of judgment in favor of the lessor;
      2. the present value as of the same date of the rent for the then remaining lease term of the lease agreement; and
      3. any incidental damages allowed under AS 45.12.530 , less expenses saved in consequence of the lessee’s default; and
    2. for goods identified to the lease contract if the lessor is unable after reasonable effort to dispose of them at a reasonable price or the circumstances reasonably indicate that effort will be unavailing
      1. accrued and unpaid rent as of the date of entry of judgment in favor of the lessor;
      2. the present value as of the same date of the rent for the then remaining lease term of the lease agreement; and
      3. any incidental damages allowed under AS 45.12.530 , less expenses saved in consequence of the lessee’s default.
  2. Except as provided in (c) of this section, the lessor shall hold for the lessee for the remaining lease term of the lease agreement any goods that have been identified to the lease contract and are in the lessor’s control.
  3. The lessor may dispose of the goods at any time before collection of the judgment for damages obtained under (a) of this section. If the disposition is before the end of the remaining lease term of the lease agreement, the lessor’s recovery against the lessee for damages will be governed by AS 45.12.527 or 45.12.528 , and the lessor will cause an appropriate credit to be provided against a judgment for damages to the extent that the amount of the judgment exceeds the recovery available under AS 45.12.527 or 45.12.528 .
  4. Payment of the judgment for damages obtained under (a) of this section entitles the lessee to the use and possession of the goods not then disposed of for the remaining lease term of and in accordance with the lease agreement.
  5. After default, by the lessee under the lease contract, of the type described in AS 45.12.523(a) or (c)(1) or, if agreed, after other default by the lessee, a lessor who is held not entitled to rent under this section shall nevertheless be awarded damages for nonacceptance under AS 45.12.527 or 45.12.528 .

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.530. Lessor’s incidental damages.

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

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.531. Standing to sue third parties for injury to goods.

  1. If a third party so deals with goods that have been identified to a lease contract as to cause actionable injury to a party to the lease contract
    1. the lessor has a right of action against the third party; and
    2. the lessee also has a right of action against the third party if the lessee
      1. has a security interest in the goods;
      2. has an insurable interest in the goods; or
      3. bears the risk of loss under the lease contract or has since the injury assumed that risk as against the lessor and the goods have been converted or destroyed.
  2. If at the time of the injury the party plaintiff did not bear the risk of loss as against the other party to the lease contract and there is no arrangement between them for disposition of the recovery, the plaintiff’s suit or settlement, subject to the plaintiff’s own interest, is as a fiduciary for the other party to the lease contract.
  3. Either party with the consent of the other may sue for the benefit of whom it may concern.

History. (§ 125 ch 35 SLA 1993)

Sec. 45.12.532. Lessor’s rights regarding residual interest.

In addition to any other recovery permitted by this chapter or other law, the lessor may recover from the lessee an amount that will fully compensate the lessor for any loss of or damage to the lessor’s residual interest in the goods caused by the default of the lessee.

History. (§ 125 ch 35 SLA 1993)

Chapter 14. Funds Transfers.

Revisor’s notes. —

This chapter is based on Article 4A of the Uniform Commercial Code.

Cross references. —

For nonapplicability of this chapter to transactions that began or causes of action that accrued before January 1, 1994, see § 14, ch. 34, SLA 1993 in the Temporary and Special Acts.

Article 1. Subject Matter and Definitions.

Sec. 45.14.101. Short title.

This chapter may be cited as Uniform Commercial Code — Funds Transfers.

History. (§ 12 ch 34 SLA 1993)

Collateral references. —

Effect of Uniform Commercial Code article 4A on attachment, garnishment, forfeiture or other third-party process against fund transfers, 66 ALR6th 567.

Sec. 45.14.102. Subject matter.

Except as otherwise provided in AS 45.14.108 , this chapter applies to funds transfers defined in AS 45.14.104 .

History. (§ 12 ch 34 SLA 1993)

Collateral references. —

Effect of Uniform Commercial Code article 4A on attachment, garnishment, forfeiture or other third-party process against fund transfers, 66 ALR6th 567.

Sec. 45.14.103. Payment order; definitions.

  1. In this chapter,
    1. “payment order” means an instruction of a sender to a receiving bank, transmitted orally, electronically, or in writing, to pay, or to cause another bank to pay, a fixed or determinable amount of money to a beneficiary if
      1. the instruction does not state a condition to payment to the beneficiary other than time of payment;
      2. the receiving bank is to be reimbursed by debiting an account of, or otherwise receiving payment from, the sender; and
      3. the instruction is transmitted by the sender directly to the receiving bank or to an agent, funds-transfer system, or communication system for transmittal to the receiving bank;
    2. “beneficiary” means the person to be paid by the beneficiary’s bank;
    3. “beneficiary’s bank” means the bank that is identified in a payment order in which an account of the beneficiary is to be credited under an order, or that otherwise is to make payment to the beneficiary if the order does not provide for payment to an account;
    4. “receiving bank” means the bank to which the sender’s instruction is addressed;
    5. “sender” means the person giving the instruction to the receiving bank.
  2. If an instruction complying with (a)(1) of this section is to make more than one payment to a beneficiary, the instruction is a separate payment order with respect to each payment.
  3. A payment order is issued when it is sent to the receiving bank.

History. (§ 12 ch 34 SLA 1993)

Sec. 45.14.104. Funds transfer; definitions.

In this chapter,

  1. “funds transfer” means the series of transactions, beginning with the originator’s payment order, made for the purpose of making payment to the beneficiary of the order; the term includes any payment order issued by the originator’s bank or an intermediary bank intended to carry out the originator’s payment order; a funds transfer is completed by acceptance by the beneficiary’s bank of a payment order for the benefit of the beneficiary of the originator’s payment order;
  2. “intermediary bank” means a receiving bank other than the originator’s bank or the beneficiary’s bank;
  3. “originator” means the sender of the first payment order in a funds transfer;
  4. “originator’s bank” means
    1. the receiving bank to which the payment order of the originator is issued if the originator is not a bank; or
    2. the originator if the originator is a bank.

History. (§ 12 ch 34 SLA 1993)

Sec. 45.14.105. Other definitions.

  1. In this chapter,
    1. “authorized account” means a deposit account of a customer in a bank designated by the customer as a source of payment of payment orders issued by the customer to the bank; if a customer does not so designate an account, any account of the customer is an authorized account if payment of a payment order from that account is not inconsistent with a restriction on the use of that account;
    2. “bank” means a person engaged in the business of banking and includes a savings bank, savings and loan association, credit union, and trust company; a branch or separate office of a bank is a separate bank for purposes of this chapter;
    3. “customer” means a person, including a bank, having an account with a bank or from whom a bank has agreed to receive payment orders;
    4. “funds-transfer business day” of a receiving bank means the part of a day during which the receiving bank is open for the receipt, processing, and transmittal of payment orders and cancellations and amendments of payment orders;
    5. “funds-transfer system” means a wire transfer network, automated clearinghouse, or other communication system of a clearinghouse or other association of banks through which a payment order by a bank may be transmitted to the bank to which the order is addressed;
    6. [Repealed, § 113 ch 44 SLA 2009.]
    7. “prove,” with respect to a fact, means to meet the burden of establishing the fact; “burden of establishing” has the meaning given in AS 45.01.211 .
  2. Other definitions applying to this chapter and the sections in which they appear are
    1. “acceptance” in AS 45.14.209 ;
    2. “executed” in AS 45.14.301 ;
    3. “execution date” in AS 45.14.301 ;
    4. “funds-transfer system rule” in AS 45.14.501 ;
    5. “payment by beneficiary’s bank to beneficiary” in AS 45.14.405 ;
    6. “payment by originator to beneficiary” in AS 45.14.406 ;
    7. “payment by sender to receiving bank” in AS 45.14.403 ;
    8. “payment date” in AS 45.14.401 ;
    9. “security procedure” in AS 45.14.201 .
  3. The following definitions in AS 45.04.104 apply to this chapter:
    1. “clearinghouse”;
    2. “item”;
    3. “suspends payments”.
  4. In addition, AS 45.01 contains general definitions and principles of construction and interpretation applicable throughout this chapter.

History. (§ 12 ch 34 SLA 1993; am §§ 93, 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.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, repealed (a)(6), which read, “ ‘good faith’ means honesty in fact and the observance of reasonable commercial standards of fair dealing;”; in (a)(7), substituted “AS 45.01.211 ” for “AS 45.01.201 ”; made stylistic changes.

Collateral references. —

Reasonable commercial standards defense for banks under UCC § 3-419(3), 49 ALR4th 888.

Sec. 45.14.106. Time payment order is received.

  1. The time of receipt of a payment order or communication canceling or amending a payment order is determined by the rules applicable to receipt of a notice stated in AS 45.01.212 . A receiving bank may fix a cut-off time or times on a funds-transfer business day for the receipt and processing of payment orders and communications cancelling or amending payment orders. Different cut-off times may apply to payment orders, cancellations, or amendments, or to different categories of payment orders, cancellations, or amendments. A cut-off time may apply to senders generally, or different cut-off times may apply to different senders or categories of payment orders. If a payment order or communication cancelling or amending a payment order is received after the close of a funds-transfer business day or after the appropriate cut-off time on a funds-transfer business day, the receiving bank may treat the payment order or communication as received at the opening of the next funds-transfer business day.
  2. If this chapter refers to an execution date or payment date or states a day on which a receiving bank is required to take action, and the date or day does not fall on a funds-transfer business day, the next day that is a funds-transfer business day is treated as the date or day stated, unless the contrary is stated in this chapter.

History. (§ 12 ch 34 SLA 1993; am § 94 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 (a), substituted “AS 45.01.212 ” for “AS 45.01.201 (27)” in the first sentence; substituted “cancelling” for “canceling” twice in the subsection.

Sec. 45.14.107. Federal reserve regulations and operating circulars.

Regulations of the Board of Governors of the Federal Reserve System and operating circulars of the federal reserve banks supersede an inconsistent provision of this chapter to the extent of the inconsistency.

History. (§ 12 ch 34 SLA 1993)

Sec. 45.14.108. Relationship to federal law.

  1. Except as provided in (b) of this section, this chapter does not apply to a funds transfer if a part of the funds transfer is governed by 15 U.S.C. 1693 — 1693r (Electronic Fund Transfer Act of 1978), as amended from time to time.
  2. This chapter applies to a funds transfer that is a remittance transfer as defined in 15 U.S.C. 1693o-1, as amended from time to time, unless the remittance transfer is an electronic fund transfer as defined in 15 U.S.C. 1693a, as amended from time to time.
  3. In a funds transfer to which this chapter applies, in the event of an inconsistency between an applicable provision of this chapter and an applicable provision of 15 U.S.C. 1693 — 1693r, the provision of 15 U.S.C. 1693 — 1693r governs to the extent of the inconsistency.

History. (§ 12 ch 34 SLA 1993; am §§ 1, 2 ch 64 SLA 2013)

Effect of amendments. —

The 2013 amendment, effective July 1, 2013, in (a), substituted “Except as provided in (b) of this section, this” for “This”, added “as amended from time to time” at the end; added (b) and (c).

Article 2. Issue and Acceptance of Payment Order.

Sec. 45.14.201. Security procedure.

  1. In this chapter, “security procedure” means a procedure established by agreement of a customer and a receiving bank for the purpose of
    1. verifying that a payment order or communication amending or canceling a payment order is that of the customer; or
    2. detecting error in the transmission or the content of the payment order or communication.
  2. A security procedure may require the use of algorithms or other codes, identifying words or numbers, encryption, call-back procedures, or similar security devices. Comparison of a signature on a payment order or communication with an authorized specimen signature of the customer is not by itself a security procedure.

History. (§ 12 ch 34 SLA 1993)

Sec. 45.14.202. Authorized and verified payment orders.

  1. A payment order received by the receiving bank is the authorized order of the person identified as sender if that person authorized the order or is otherwise bound by it under the law of agency.
  2. If a bank and its customer have agreed that the authenticity of payment orders issued to the bank in the name of the customer as sender will be verified under a security procedure, a payment order received by the receiving bank is effective as the order of the customer, whether or not authorized, if
    1. the security procedure is a commercially reasonable method of providing security against unauthorized payment orders; and
    2. the bank proves that it accepted the payment order in good faith and in compliance with the security procedure and any written agreement or instruction of the customer restricting acceptance of payment orders issued in the name of the customer; the bank is not required to follow an instruction that violates a written agreement with the customer or notice of which is not received at a time and in a manner affording the bank a reasonable opportunity to act on it before the payment order is accepted.
  3. Commercial reasonableness of a security procedure is a question of law to be determined by considering the wishes of the customer expressed to the bank, the circumstances of the customer known to the bank, including the size, type, and frequency of payment orders normally issued by the customer to the bank, alternative security procedures offered to the customer, and security procedures in general use by customers and receiving banks similarly situated. A security procedure is considered to be commercially reasonable if
    1. the security procedure was chosen by the customer after the bank offered, and the customer refused, a security procedure that was commercially reasonable for that customer; and
    2. the customer expressly agreed in writing to be bound by a payment order, whether or not authorized, issued in its name and accepted by the bank in compliance with the security procedure chosen by the customer.
  4. This section applies to amendments and cancellations of payment orders to the same extent that it applies to payment orders.
  5. Except as provided in this section and in AS 45.14.203 (a)(1), rights and obligations arising under this section or AS 45.14.203 may not be varied by agreement.
  6. In this chapter, “sender” includes the customer in whose name a payment order is issued if the order is the authorized order of the customer under (a) of this section, or it is effective as the order of the customer under (b) of this section.

History. (§ 12 ch 34 SLA 1993)

Sec. 45.14.203. Unenforceability of certain verified payment orders.

  1. If an accepted payment order is not, under AS 45.14.202(a) , an authorized order of a customer identified as sender, but is effective as an order of the customer under AS 45.14.202(b) , the following rules apply:
    1. by express written agreement, the receiving bank may limit the extent to which it is entitled to enforce or retain payment of the payment order;
    2. the receiving bank is not entitled to enforce or retain payment of the payment order if the customer proves that the order was not caused, directly or indirectly, by a person
      1. entrusted at any time with duties to act for the customer with respect to payment orders or the security procedure; or
      2. who obtained access to transmitting facilities of the customer or who obtained, from a source controlled by the customer and without authority of the receiving bank, information facilitating breach of the security procedure, regardless of how the information was obtained or whether the customer was at fault; in this subparagraph, “information” includes any access device, computer software, or the like.
  2. This section applies to amendments of payment orders to the same extent that it applies to payment orders.

History. (§ 12 ch 34 SLA 1993)

Sec. 45.14.204. Refund of payment and duty of customer to report with respect to unauthorized payment order.

  1. If a receiving bank accepts a payment order issued in the name of its customer as sender and if the payment order is not authorized and not effective as the order of the customer under AS 45.14.202 , or not enforceable in whole or in part against the customer under AS 45.14.203 , the bank shall refund payment of the payment order received from the customer to the extent that the bank is not entitled to enforce payment and shall pay interest on the refundable amount calculated from the date the bank received payment to the date of the refund. However, the customer is not entitled to interest from the bank on the amount to be refunded if the customer fails to exercise ordinary care to determine that the order was not authorized by the customer and to notify the bank of the relevant facts within a reasonable time not exceeding 90 days after the date the customer received notification from the bank that the order was accepted or that the customer’s account was debited with respect to the order. The bank is not entitled to recovery from the customer on account of a failure by the customer to give notification as stated in this section.
  2. Reasonable time under (a) of this section may be fixed by agreement as stated in AS 45.01.302(b) , but the obligation of a receiving bank to refund payment as stated in (a) of this section may not otherwise be varied by agreement.

History. (§ 12 ch 34 SLA 1993; am § 95 ch 44 SLA 2009)

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, in (b), substituted “AS 45.01.302(b) ” for “AS 45.01.204(a)”.

Sec. 45.14.205. Erroneous payment orders.

  1. If an accepted payment order was transmitted under a security procedure for the detection of error and the payment order was an erroneous payment order, the following rules apply:
    1. if the sender proves that the sender or a person acting on behalf of the sender under AS 45.14.206 complied with the security procedure and that the error would have been detected if the receiving bank had also complied, the sender is not obliged to pay the order to the extent stated in (2) and (3) of this subsection;
    2. if the funds transfer is completed on the basis of an erroneous payment order described in (d)(1) or (3) of this section, the sender is not obliged to pay the order and the receiving bank is entitled to recover from the beneficiary any amount paid to the beneficiary to the extent allowed by the law governing mistake and restitution;
    3. if the funds transfer is completed on the basis of an erroneous payment order described in (d)(2) of this section, the sender is not obliged to pay the order to the extent the amount received by the beneficiary is greater than the amount intended by the sender; in that case, the receiving bank is entitled to recover from the beneficiary the excess amount received to the extent allowed by the law governing mistake and restitution.
  2. If the sender of an erroneous payment order is not obliged to pay all or part of the order, and if the sender receives notification from the receiving bank that the order was accepted by the bank or that the sender’s account was debited with respect to the order, the sender has a duty to exercise ordinary care, on the basis of information available to the sender, to discover the error with respect to the order and to advise the bank of the relevant facts within a reasonable time, not exceeding 90 days, after the bank’s notification was received by the sender. If the bank proves that the sender failed to perform that duty, the sender is liable to the bank for the loss the bank proves it incurred as a result of the failure, but the liability of the sender may not exceed the amount of the sender’s order.
  3. This section applies to amendments to payment orders to the same extent it applies to payment orders.
  4. In this section, “erroneous payment order” means a payment order that
    1. erroneously instructed payment to a beneficiary not intended by the sender;
    2. erroneously instructed payment in an amount greater than the amount intended by the sender; or
    3. was an erroneously transmitted duplicate of a payment order previously sent by the sender.

History. (§ 12 ch 34 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. 45.14.206. Transmission of payment order through funds-transfer or other communication system.

  1. If a payment order addressed to a receiving bank is transmitted to a funds-transfer system or other third-party communication system for transmittal to the bank, the system is considered to be an agent of the sender for the purpose of transmitting the payment order to the bank. If there is a discrepancy between the terms of the payment order transmitted to the system and the terms of the payment order transmitted by the system to the bank, the terms of the payment order of the sender are those transmitted by the system. This section does not apply to a funds-transfer system of the federal reserve banks.
  2. This section applies to cancellations and amendments of payment orders to the same extent that it applies to payment orders.

History. (§ 12 ch 34 SLA 1993)

Sec. 45.14.207. Misdescription of beneficiary.

  1. Subject to (b) of this section, if, in a payment order received by the beneficiary’s bank, the name, bank account number, or other identification of the beneficiary refers to a nonexistent or unidentifiable person or account, no person has rights as a beneficiary of the order, and acceptance of the order cannot occur.
  2. If a payment order received by the beneficiary’s bank identifies the beneficiary both by name and by an identifying or bank account number and the name and number identify different persons, the following rules apply:
    1. except as otherwise provided in (c) of this section, if the beneficiary’s bank does not know that the name and number refer to different persons, it may rely on the number as the proper identification of the beneficiary of the order; the beneficiary’s bank does not need to determine whether the name and number refer to the same person;
    2. if the beneficiary’s bank pays the person identified by name or knows that the name and number identify different persons, no person has rights as beneficiary except the person paid by the beneficiary’s bank if that person was entitled to receive payment from the originator of the funds transfer; if no person has rights as beneficiary, acceptance of the order cannot occur.
  3. If a payment order described in (b) of this section is accepted, if the originator’s payment order described the beneficiary inconsistently by name and number, and if the beneficiary’s bank pays the person identified by number as permitted by (b)(1) of this section, the following rules apply:
    1. if the originator is a bank, the originator is obliged to pay its order;
    2. if the originator is not a bank and proves that the person identified by number was not entitled to receive payment from the originator, the originator is not obliged to pay its order unless the originator’s bank proves that the originator, before acceptance of the originator’s order, had notice that payment of a payment order issued by the originator might be made by the beneficiary’s bank on the basis of an identifying or bank account number even if it identifies a person different from the named beneficiary; proof of notice may be made by any admissible evidence; the originator’s bank satisfies the burden of proof if it proves that the originator, before the payment order was accepted, signed a writing stating the information to which the notice relates.
  4. In a case governed by (b)(1) of this section, if the beneficiary’s bank rightfully pays the person identified by number and that person was not entitled to receive payment from the originator, the amount paid may be recovered from that person to the extent allowed by the law governing mistake and restitution as follows:
    1. if the originator is obliged to pay its payment order as stated in (c) of this section, the originator has the right to recover;
    2. if the originator is not a bank and is not obliged to pay its payment order, the originator’s bank has the right to recover.

History. (§ 12 ch 34 SLA 1993)

Sec. 45.14.208. Misdescription of intermediary bank or beneficiary’s bank.

  1. The following rules in this subsection apply to a payment order identifying an intermediary bank or the beneficiary’s bank only by an identifying number:
    1. the receiving bank may rely on the number as the proper identification of the intermediary or beneficiary’s bank and need not determine whether the number identifies a bank;
    2. the sender is obliged to compensate the receiving bank for any loss and expenses incurred by the receiving bank as a result of its reliance on the number in executing or attempting to execute the order.
  2. The following rules in this subsection apply to a payment order identifying an intermediary bank or the beneficiary’s bank both by name and an identifying number if the name and number identify different persons:
    1. if the sender is a bank, the receiving bank may rely on the number as the proper identification of the intermediary or beneficiary’s bank if the receiving bank, when it executes the sender’s order, does not know that the name and number identify different persons; the receiving bank does not need to determine whether the name and number refer to the same person or whether the number refers to a bank; the sender is obliged to compensate the receiving bank for any loss and expenses incurred by the receiving bank as a result of its reliance on the number in executing or attempting to execute the order;
    2. if the sender is not a bank and the receiving bank proves that the sender, before the payment order was accepted, had notice that the receiving bank might rely on the number as the proper identification of the intermediary or beneficiary’s bank even if it identifies a person different from the bank identified by name, the rights and obligations of the sender and the receiving bank are governed by (b)(1) of this section, as though the sender were a bank; proof of notice may be made by any admissible evidence; the receiving bank satisfies the burden of proof if it proves that the sender, before the payment order was accepted, signed a writing stating the information to which the notice relates;
    3. regardless of whether the sender is a bank, the receiving bank may rely on the name as the proper identification of the intermediary or beneficiary’s bank if the receiving bank, at the time it executes the sender’s order, does not know that the name and number identify different persons; the receiving bank does not need to determine whether the name and number refer to the same person;
    4. if the receiving bank knows that the name and number identify different persons, reliance on either the name or the number in executing the sender’s payment order is a breach of the obligation stated in AS 45.14.302(a)(1) .

History. (§ 12 ch 34 SLA 1993)

Sec. 45.14.209. Acceptance of payment order.

  1. Subject to (d) of this section, a receiving bank other than the beneficiary’s bank accepts a payment order when it executes the order.
  2. Subject to (c) and (d) of this section, a beneficiary’s bank accepts a payment order at the earliest of the following times:
    1. when the bank
      1. pays the beneficiary as stated in AS 45.14.405(a) or (b); or
      2. notifies the beneficiary of receipt of the order or that the account of the beneficiary has been credited with respect to the order unless the notice indicates that the bank is rejecting the order or that funds with respect to the order may not be withdrawn or used until receipt of payment from the sender of the order;
    2. when the bank receives payment of the entire amount of the sender’s order under AS 45.14.403(a)(1) or (2); or
    3. the opening of the next funds-transfer business day of the bank following the payment date of the order if, at the opening of the next funds-transfer business day, the amount of the sender’s order is fully covered by a withdrawable credit balance in an authorized account of the sender, or the bank has otherwise received full payment from the sender, unless the order was rejected before the opening of the next funds-transfer business day, is rejected within one hour after the opening of the next funds-transfer business day, or, if later, is rejected one hour after the opening of the next business day of the sender following the payment date; if notice of rejection is received by the sender after the payment date and the authorized account of the sender does not bear interest, the bank is obliged to pay interest to the sender on the amount of the order for the number of days elapsing after the payment date to the day the sender receives notice or learns that the order was not accepted, counting that day as an elapsed day; if the withdrawable credit balance during that period falls below the amount of the order, the amount of interest payable is reduced accordingly.
  3. Acceptance of a payment order may not occur before the order is received by the receiving bank. Acceptance does not occur under (b)(2) or (3) of this section if the beneficiary of the payment order does not have an account with the receiving bank, the account has been closed, or the receiving bank is not permitted by law to receive credits for the beneficiary’s account.
  4. A payment order issued to the originator’s bank cannot be accepted until the payment date if the bank is the beneficiary’s bank, or the execution date if the bank is not the beneficiary’s bank. If the originator’s bank executes the originator’s payment order before the execution date or pays the beneficiary of the originator’s payment order before the payment date and the payment order is subsequently canceled under AS 45.14.211(b) , the bank may recover from the beneficiary any payment received to the extent allowed by the law governing mistake and restitution.

History. (§ 12 ch 34 SLA 1993)

Sec. 45.14.210. Rejection of payment order.

  1. A payment order is rejected by the receiving bank by a notice of rejection transmitted to the sender orally, electronically, or in writing. A notice of rejection does not need to use particular words and is sufficient if it indicates that the receiving bank is rejecting the order or will not execute or pay the order. Rejection is effective when the notice is given if transmission is by a means that is reasonable in the circumstances. If notice of rejection is given by a means that is not reasonable, rejection is effective when the notice is received. If an agreement of the sender and receiving bank establishes the means to be used to reject a payment order, means
    1. complying with the agreement are reasonable; and
    2. not complying with the agreement are not reasonable unless significant delay in receipt of the notice did not result from the use of the noncomplying means.
  2. This subsection applies if a receiving bank other than the beneficiary’s bank fails to execute a payment order despite the existence on the execution date of a withdrawable credit balance in an authorized account of the sender sufficient to cover the order. If the sender does not receive notice of rejection of the order on the execution date and the authorized account of the sender does not bear interest, the bank is obliged to pay interest to the sender on the amount of the order for the number of days elapsing after the execution date to the earlier of the day the order is canceled under AS 45.14.211(e) or the day the sender receives notice or learns that the order was not executed, counting the final day of the period as an elapsed day. If the withdrawable credit balance during that period falls below the amount of the order, the amount of interest is reduced accordingly.
  3. If a receiving bank suspends payments, all unaccepted payment orders issued to it are considered rejected at the time the bank suspends payments.
  4. Acceptance of a payment order precludes a later rejection of the order. Rejection of a payment order precludes a later acceptance of the order.

History. (§ 12 ch 34 SLA 1993)

Sec. 45.14.211. Cancellation and amendment of payment order.

  1. A communication of the sender of a payment order canceling or amending the order may be transmitted to the receiving bank orally, electronically, or in writing. If a security procedure is in effect between the sender and the receiving bank, the communication is not effective to cancel or amend the order unless the communication is verified under the security procedure or the bank agrees to the cancellation or amendment.
  2. Subject to (a) of this section, a communication by the sender canceling or amending a payment order is effective to cancel or amend the order if notice of the communication is received at a time and in a manner affording the receiving bank a reasonable opportunity to act on the communication before the bank accepts the payment order.
  3. After a payment order has been accepted, cancellation or amendment of the order is not effective unless the receiving bank agrees or a funds-transfer system rule allows cancellation or amendment without agreement of the bank. The following rules also apply:
    1. with respect to a payment order accepted by a receiving bank other than the beneficiary’s bank, cancellation or amendment is not effective unless a conforming cancellation or amendment of the payment order issued by the receiving bank is also made;
    2. with respect to a payment order accepted by the beneficiary’s bank, cancellation or amendment is not effective unless the order was issued in execution of an unauthorized payment order, or because of a mistake by a sender in the funds transfer, if the mistake resulted in the issuance of a payment order that
      1. is a duplicate of a payment order previously issued by the sender;
      2. orders payment to a beneficiary not entitled to receive payment from the originator; or
      3. orders payment in an amount greater than the amount the beneficiary was entitled to receive from the originator.
  4. Under (c)(2) of this section, if the payment order is canceled or amended, the beneficiary’s bank is entitled to recover from the beneficiary any amount paid to the beneficiary to the extent allowed by the law governing mistake and restitution.
  5. An unaccepted payment order is canceled by operation of law at the close of the fifth funds-transfer business day of the receiving bank after the execution date or payment date of the order.
  6. A canceled payment order cannot be accepted. If an accepted payment order is canceled, the acceptance is nullified and no person has a right or obligation based on the acceptance. Amendment of a payment order is considered to be cancellation of the original order at the time of amendment and issue of a new payment order in the amended form at the same time.
  7. Unless otherwise provided in an agreement of the parties or in a funds-transfer system rule, if the receiving bank, after accepting a payment order, agrees to cancellation or amendment of the order by the sender or is bound by a funds-transfer system rule allowing cancellation or amendment without the banks’ agreement, the sender, whether or not cancellation or amendment is effective, is liable to the bank for any loss and expenses, including reasonable attorney fees, incurred by the bank as a result of the cancellation or amendment or attempted cancellation or amendment.
  8. A payment order is not revoked by the death or legal incapacity of the sender unless the receiving bank knows of the death or of an adjudication of incapacity by a court of competent jurisdiction and has reasonable opportunity to act before acceptance of the order.
  9. A funds-transfer system rule is not effective to the extent that it conflicts with (c)(2) or (d) of this section.

History. (§ 12 ch 34 SLA 1993)

Sec. 45.14.212. Liability and duty of receiving bank regarding unaccepted payment order.

If a receiving bank fails to accept a payment order that it is obliged by express agreement to accept, the bank is liable for breach of the agreement to the extent provided in the agreement or in this chapter, but does not otherwise have a duty to accept a payment order or, before acceptance, to take action, or refrain from taking action, with respect to the order except as provided in this chapter or by express agreement. Liability based on acceptance arises only when acceptance occurs as stated in AS 45.14.209 , and liability is limited to liability provided in this chapter. A receiving bank is not the agent of the sender or beneficiary of the payment order it accepts, or of another party to the funds transfer, and the bank does not owe a duty to a party to the funds transfer except as provided in this chapter or by express agreement.

History. (§ 12 ch 34 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.

Article 3. Execution of Sender’s Payment Order by Receiving Bank.

Sec. 45.14.301. Execution and execution date.

  1. A payment order is executed by the receiving bank when it issues a payment order intended to carry out the payment order received by the bank. A payment order received by the beneficiary’s bank can be accepted but cannot be executed.
  2. “Execution date” of a payment order means the day on which the receiving bank may properly issue a payment order in execution of the sender’s order. The execution date may be determined by instruction of the sender but cannot be earlier than the day the order is received and, unless otherwise determined, is the day the order is received. If the sender’s instruction states a payment date, the execution date is the payment date or an earlier date on which execution is reasonably necessary to allow payment to the beneficiary on the payment date.

History. (§ 12 ch 34 SLA 1993)

Sec. 45.14.302. Obligations of receiving bank in execution of payment order.

  1. Except as provided in (b) — (d) of this section, if the receiving bank accepts a payment order under AS 45.14.209(a) , the bank has the following obligations in executing the order:
    1. the receiving bank is obliged to issue, on the execution date, a payment order complying with the sender’s order and to follow the sender’s instructions concerning
      1. an intermediary bank or funds-transfer system to be used in carrying out the funds transfer; or
      2. the means by which payment orders are to be transmitted in the funds transfer; if the originator’s bank issues a payment order to an intermediary bank, the originator’s bank is obliged to instruct the intermediary bank according to the instruction of the originator; an intermediary bank in the funds transfer is similarly bound by an instruction given to it by the sender of the payment order it accepts;
    2. if the sender’s instruction states that the funds transfer is to be carried out telephonically or by wire transfer or otherwise indicates that the funds transfer is to be carried out by the most expeditious means, the receiving bank is obliged to transmit its payment order by the most expeditious available means, and to instruct an intermediary bank accordingly; if a sender’s instruction states a payment date, the receiving bank is obliged to transmit its payment order at a time and by means reasonably necessary to allow payment to the beneficiary on the payment date or as soon after that date as is feasible.
  2. Unless otherwise instructed, a receiving bank executing a payment order may
    1. use any funds-transfer system if use of that system is reasonable in the circumstances; and
    2. issue a payment order to the beneficiary’s bank or to an intermediary bank through which a payment order conforming to the sender’s order can expeditiously be issued to the beneficiary’s bank if the receiving bank exercises ordinary care in the selection of the intermediary bank; a receiving bank is not required to follow an instruction of the sender designating a funds-transfer system to be used in carrying out the funds transfer if the receiving bank, in good faith, determines that it is not feasible to follow the instruction or that following the instruction would unduly delay completion of the funds transfer.
  3. Unless (a)(2) of this section applies or the receiving bank is otherwise instructed, the bank may execute a payment order by transmitting its payment order by first class mail or by any means reasonable in the circumstances. If the receiving bank is instructed to execute the sender’s order by transmitting its payment order by a particular means, the receiving bank may issue its payment order by the means stated or by means as expeditious as the means stated.
  4. Unless instructed by the sender,
    1. the receiving bank may not obtain payment of its charges for services and expenses in connection with the execution of the sender’s order by issuing a payment order in an amount equal to the amount of the sender’s order less the amount of the charges; and
    2. may not instruct a subsequent receiving bank to obtain payment of its charges in the same manner.

History. (§ 12 ch 34 SLA 1993)

Sec. 45.14.303. Erroneous execution of payment order.

  1. If a receiving bank executes the payment order of the sender by issuing a payment order in an amount greater than the amount of the sender’s order, or if a receiving bank issues a payment order in execution of the sender’s order and then issues a duplicate order, the bank is entitled to payment of the amount of the sender’s order under AS 45.14.402(c) if that subsection is otherwise satisfied. The bank is entitled to recover from the beneficiary of the erroneous order the excess payment received to the extent allowed by the law governing mistake and restitution.
  2. A receiving bank that executes the payment order of the sender by issuing a payment order in an amount less than the amount of the sender’s order is entitled to payment of the amount of the sender’s order under AS 45.14.402(c) if that subsection is otherwise satisfied and the bank corrects its mistake by issuing an additional payment order for the benefit of the beneficiary of the sender’s order. If the error is not corrected, the issuer of the erroneous order is entitled to receive or retain payment from the sender of the order it accepted only to the extent of the amount of the erroneous order. This subsection does not apply if the receiving bank executes the sender’s payment order by issuing a payment order in an amount less than the amount of the sender’s order for the purpose of obtaining payment of its charges for services and expenses pursuant to instruction of the sender.
  3. If a receiving bank executes the payment order of the sender by issuing a payment order to a beneficiary different from the beneficiary of the sender’s order and the funds transfer is completed on the basis of that error, the sender of the payment order that was erroneously executed and all previous senders in the funds transfer are not obliged to pay the payment orders they issued. The issuer of the erroneous order is entitled to recover from the beneficiary of the order the payment received to the extent allowed by the law governing mistake and restitution.

History. (§ 12 ch 34 SLA 1993)

Sec. 45.14.304. Duty of sender to report erroneously executed payment order.

If the sender of a payment order that is erroneously executed as stated in AS 45.14.303 receives notification from the receiving bank that the order was executed or that the sender’s account was debited with respect to the order, the sender has a duty to exercise ordinary care to determine, on the basis of information available to the sender, that the order was erroneously executed and to notify the bank of the relevant facts within a reasonable time not exceeding 90 days after the notification from the bank was received by the sender. If the sender fails to perform that duty, the bank is not obliged to pay interest on any amount refundable to the sender under AS 45.14.402(d) for the period before the bank learns of the execution error. The bank is not entitled to any recovery from the sender on account of a failure by the sender to perform the duty stated in this section.

History. (§ 12 ch 34 SLA 1993)

Sec. 45.14.305. Liability for late or improper execution or failure to execute payment order.

  1. If a funds transfer is completed but execution of a payment order by the receiving bank in breach of AS 45.14.302 results in delay in payment to the beneficiary, the bank is obliged to pay interest to either the originator or the beneficiary of the funds transfer for the period of delay caused by the improper execution. Except as provided in (c) of this section, additional damages are not recoverable.
  2. If execution of a payment order by a receiving bank in breach of AS 45.14.302 results in noncompletion of the funds transfer, failure to use an intermediary bank designated by the originator, or issuance of a payment order that does not comply with the terms of the payment order of the originator, the bank is liable to the originator for its expenses in the funds transfer and for incidental expenses and interest losses, to the extent not covered by (a) of this section, resulting from the improper execution. Except as provided in (c) of this section, additional damages are not recoverable.
  3. In addition to the amounts payable under (a) and (b) of this section, damages, including consequential damages, are recoverable to the extent provided in an express written agreement of the receiving bank.
  4. If a receiving bank fails to execute a payment order it was obliged by express agreement to execute, the receiving bank is liable to the sender for its expenses in the transaction and for incidental expenses and interest losses resulting from the failure to execute. Additional damages, including consequential damages, are recoverable to the extent provided in an express written agreement of the receiving bank, but are not otherwise recoverable.
  5. Reasonable attorney fees are recoverable if demand for compensation under (a) or (b) of this section is made and refused before an action is brought on the claim. If a claim is made for breach of an agreement under (d) of this section and the agreement does not provide for damages, reasonable attorney fees are recoverable if demand for compensation under (d) of this section is made and refused before an action is brought on the claim. Recovery of attorney fees under this subsection is an exception to the general provisions of Rule 82, Alaska Rules of Civil Procedure.
  6. Except as stated in this section, the liability of a receiving bank under (a) and (b) of this section may not be varied by agreement.

History. (§ 12 ch 34 SLA 1993; am § 41 ch 22 SLA 2015)

Cross references. —

For effect of the enactment of (e) of this section on Alaska Rule of Civil Procedure 82, see § 15, ch. 34, SLA 1993 in the Temporary and Special Acts.

Effect of amendments. —

The 2015 amendment, effective July 1, 2015, in (e), substituted “Rule 82, Alaska Rules of Civil Procedure” for “Alaska Rule of Civil Procedure 82”.

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.

Article 4. Payment.

Sec. 45.14.401. Payment date.

“Payment date” of a payment order means the day on which the amount of the order is payable to the beneficiary by the beneficiary’s bank. The payment date may be determined by instruction of the sender but cannot be earlier than the day the order is received by the beneficiary’s bank and, unless otherwise determined, is the day the order is received by the beneficiary’s bank.

History. (§ 12 ch 34 SLA 1993)

Sec. 45.14.402. Obligation of sender to pay receiving bank.

  1. This section is subject to AS 45.14.205 and 45.14.207 .
  2. With respect to a payment order issued to the beneficiary’s bank, acceptance of the order by the bank obliges the sender to pay the bank the amount of the order, but payment is not due until the payment date of the order.
  3. With respect to a payment order issued to a receiving bank other than the beneficiary’s bank, acceptance of the order by the receiving bank obliges the sender to pay the bank the amount of the sender’s order. Payment by the sender is not due until the execution date of the sender’s order. The obligation of that sender to pay its payment order is excused if the funds transfer is not completed by acceptance by the beneficiary’s bank of a payment order instructing payment to the beneficiary of that sender’s payment order. This subsection is subject to (e) of this section and to AS 45.14.303 .
  4. If the sender of a payment order pays the order and was not obliged to pay all or part of the amount paid, the bank receiving payment is obliged to refund payment to the extent the sender was not obliged to pay. Except as provided in AS 45.14.204 and 45.14.304 , interest is payable on the refundable amount from the date of payment.
  5. If a funds transfer is not completed as stated in (c) of this section and an intermediary bank is obliged to refund payment as stated in (d) of this section but is unable to do so because not permitted by applicable law or because the bank suspends payments, a sender in the funds transfer that executed a payment order in compliance with an instruction, as stated in AS 45.14.302(a)(1) , to route the funds transfer through that intermediary bank is entitled to receive or retain payment from the sender of the payment order that it accepted. The first sender in the funds transfer that issued an instruction requiring routing through that intermediary bank is subrogated to the right of the bank that paid the intermediary bank to refund as stated in (d) of this section.
  6. The right of the sender of a payment order to be excused from the obligation to pay the order as stated in (c) of this section or to receive refund under (d) of this section may not be varied by agreement.

History. (§ 12 ch 34 SLA 1993)

Sec. 45.14.403. Payment by sender to receiving bank.

  1. Payment of the sender’s obligation under AS 45.14.402 to pay the receiving bank occurs as follows:
    1. if the sender is a bank, payment occurs when the receiving bank receives final settlement of the obligation through a federal reserve bank or through a funds-transfer system;
    2. if the sender is a bank and the sender credited an account of the receiving bank with the sender or caused an account of the receiving bank in another bank to be credited, payment occurs when the credit is withdrawn or, if not withdrawn, at midnight of the day on which the credit is withdrawable and the receiving bank learns of that fact;
    3. if the receiving bank debits an account of the sender with the receiving bank, payment occurs when the debit is made to the extent that the debit is covered by a withdrawable credit balance in the account.
  2. If the sender and receiving bank are members of a funds-transfer system that nets obligations multilaterally among participants, the receiving bank receives final settlement when settlement is complete in accordance with the rules of the system. The obligation of the sender to pay the amount of a payment order transmitted through the funds-transfer system may be satisfied, to the extent permitted by the rules of the system, by setting off and applying against the sender’s obligation the right of the sender to receive payment from the receiving bank of the amount of any other payment order transmitted to the sender by the receiving bank through the funds-transfer system. The aggregate balance of obligations owed by each sender to each receiving bank in the funds-transfer system may be satisfied, to the extent permitted by the rules of the system, by setting off and applying against that balance the aggregate balance of obligations owed to the sender by other members of the system. The aggregate balance is determined after the right of setoff stated in the second sentence of this subsection has been exercised.
  3. If two banks transmit payment orders to each other under an agreement that settlement of the obligations of each bank to the other under AS 45.14.402 will be made at the end of the day or other period, the total amount owed with respect to all orders transmitted by one bank shall be set off against the total amount owed with respect to all orders transmitted by the other bank. To the extent of the setoff, each bank has made payment to the other.
  4. In a case not covered under (a) of this section, the time when payment of the sender’s obligation under AS 45.14.402(b) or (c) occurs is governed by applicable principles of law that determine when an obligation is satisfied.

History. (§ 12 ch 34 SLA 1993; am § 58 ch 41 SLA 2009)

Effect of amendments. —

The 2009 amendment, effective June 21, 2009, in (a)(2), deleted the (A) and (B) subparagraph designations.

Sec. 45.14.404. Obligation of beneficiary’s bank to pay and give notice to beneficiary.

  1. Subject to AS 45.14.211(f) and 45.14.405(d) and (e), if a beneficiary’s bank accepts a payment order, the bank is obliged to pay the amount of the order to the beneficiary of the order. Payment is due on the payment date of the order, but if acceptance occurs on the payment date after the close of the funds-transfer business day of the bank, payment is due on the next funds-transfer business day. If the bank refuses to pay after demand by the beneficiary and receipt of notice of particular circumstances that will give rise to consequential damages as a result of nonpayment, the beneficiary may recover damages resulting from the refusal to pay to the extent that the bank had notice of the damages, unless the bank proves that it did not pay because of a reasonable doubt concerning the right of the beneficiary to payment.
  2. If a payment order accepted by the beneficiary’s bank instructs payment to an account of the beneficiary, the bank is obliged to notify the beneficiary of receipt of the order before midnight of the next funds-transfer business day following the payment date. If the payment order does not instruct payment to an account of the beneficiary, the bank is required to notify the beneficiary only if notice is required by the order. Notice may be given by first class mail or other means reasonable in the circumstances. If the bank fails to give the required notice, the bank is obliged to pay interest to the beneficiary on the amount of the payment order from the day notice should have been given until the day the beneficiary learned of receipt of the payment order by the bank. Other damages are not recoverable. Notwithstanding Rule 82, Alaska Rules of Civil Procedure, reasonable attorney fees are also recoverable if demand for interest is made and refused before an action is brought on the claim.
  3. The right of a beneficiary to receive payment and damages as stated in (a) of this section may not be varied by agreement or a funds-transfer system rule. The right of a beneficiary to be notified as stated in (b) of this section may be varied by agreement of the beneficiary or by a funds-transfer system rule if the beneficiary is notified of the rule before initiation of the funds transfer.

History. (§ 12 ch 34 SLA 1993; am § 42 ch 22 SLA 2015)

Cross references. —

For effect of the enactment of (b) of this section on Alaska Rule of Civil Procedure 82, see § 15, ch. 34, SLA 1993 in the Temporary and Special Acts.

Effect of amendments. —

The 2015 amendment, effective July 1, 2015, in the last sentence in (b), substituted “Rule 82, Alaska Rules of Civil Procedure” for “Alaska Rule of Civil Procedure 82”.

Sec. 45.14.405. Payment by beneficiary’s bank to beneficiary.

  1. If the beneficiary’s bank credits an account of the beneficiary of a payment order, payment of the bank’s obligation under AS 45.14.404(a) occurs when and to the extent that
    1. the beneficiary is notified of the right to withdraw the credit;
    2. the bank lawfully applies the credit to a debt of the beneficiary; or
    3. funds with respect to the order are otherwise made available to the beneficiary by the bank.
  2. If the beneficiary’s bank does not credit an account of the beneficiary of a payment order, the time when payment of the bank’s obligation under AS 45.14.404(a) occurs is governed by principles of law that determine when an obligation is satisfied.
  3. Except as stated in (d) and (e) of this section, if the beneficiary’s bank pays the beneficiary of a payment order under a condition to payment or agreement of the beneficiary giving the bank the right to recover payment from the beneficiary if the bank does not receive payment of the order, the condition to payment or agreement is not enforceable.
  4. A funds-transfer system rule may provide that payments made to beneficiaries of funds transfers made through the system are provisional until receipt of payment by the beneficiary’s bank of the payment order it accepted. A beneficiary’s bank that makes a payment that is provisional under the rule is entitled to refund from the beneficiary if the rule requires that both the beneficiary and the originator be given notice of the provisional nature of the payment before the funds transfer is initiated, if the beneficiary, the beneficiary’s bank, and the originator’s bank agreed to be bound by the rule, and if the beneficiary’s bank did not receive payment of the payment order that it accepted. If the beneficiary is obliged to refund payment to the beneficiary’s bank, acceptance of the payment order by the beneficiary’s bank is nullified and a payment by the originator of the funds transfer to the beneficiary does not occur under AS 45.14.406 .
  5. This subsection applies to a funds transfer that includes a payment order transmitted over a funds-transfer system that nets obligations multilaterally among participants and has in effect a loss-sharing agreement among participants for the purpose of providing funds necessary to complete settlement of the obligations of one or more participants that do not meet their settlement obligations. If the beneficiary’s bank in the funds transfer accepts a payment order and the system fails to complete settlement under its rules with respect to any payment order in the funds transfer,
    1. the acceptance by the beneficiary’s bank is nullified and no person has a right or obligation based on the acceptance;
    2. the beneficiary’s bank is entitled to recover payment from the beneficiary;
    3. payment by the originator to the beneficiary does not occur under AS 45.14.406 ; and
    4. subject to AS 45.14.402(e) , each sender in the funds transfer is excused from its obligation to pay its payment order under AS 45.14.402(c) because the funds transfer has not been completed.

History. (§ 12 ch 34 SLA 1993)

Sec. 45.14.406. Payment by originator to beneficiary; discharge of underlying obligation.

  1. Subject to AS 45.14.211(f) and 45.14.405(d) and (e), the originator of a funds transfer pays the beneficiary of the originator’s payment order
    1. at the time a payment order for the benefit of the beneficiary is accepted by the beneficiary’s bank in the funds transfer; and
    2. in an amount equal to the amount of the order accepted by the beneficiary’s bank, but not more than the amount of the originator’s order.
  2. If payment under (a) of this section is made to satisfy an obligation, the obligation is discharged to the same extent discharge would result from payment to the beneficiary of the same amount in money, unless
    1. the payment under (a) of this section was made by a means prohibited by the contract of the beneficiary with respect to the obligation;
    2. the beneficiary, within a reasonable time after receiving notice of receipt of the order by the beneficiary’s bank, notifies the originator of the beneficiary’s refusal of the payment;
    3. funds with respect to the order were not withdrawn by the beneficiary or applied to a debt of the beneficiary; and
    4. the beneficiary would suffer a loss that could reasonably have been avoided if payment had been made by a means complying with the contract.
  3. If payment by the originator does not result in discharge under this section, the originator is subrogated to the rights of the beneficiary to receive payment from the beneficiary’s bank under AS 45.14.404(a) .
  4. For the purpose of determining whether discharge of an obligation occurs under (b) of this section, if the beneficiary’s bank accepts a payment order in an amount equal to the amount of the originator’s payment order less charges of one or more receiving banks in the funds transfer, payment to the beneficiary is considered to be in the amount of the originator’s order unless upon demand by the beneficiary the originator does not pay the beneficiary the amount of the deducted charges.
  5. Rights of the originator or of the beneficiary of a funds transfer under this section may be varied only by agreement of the originator and the beneficiary.

History. (§ 12 ch 34 SLA 1993)

Article 5. Miscellaneous Provisions.

Sec. 45.14.501. Variation by agreement and effect of funds-transfer system rule.

  1. Except as otherwise provided in this chapter, the rights and obligations of a party to a funds transfer may be varied by agreement of the affected party.
  2. Except as otherwise provided in this chapter, a funds-transfer system rule governing rights and obligations between participating banks using the system may be effective even if the rule conflicts with this chapter and indirectly affects another party to the funds transfer who does not consent to the rule. A funds-transfer system rule may also govern rights and obligations of parties other than participating banks using the system, to the extent stated in AS 45.14.404(c) , 45.14.405(d) , and 45.14.507(c) and (d). In this subsection, “funds-transfer system rule” means
    1. a rule of an association of banks governing transmission of payment orders by means of a funds-transfer system of the association or rights and obligations with respect to those orders; or
    2. a rule of an association of banks, to the extent the rule governs rights and obligations between banks that are parties to a funds transfer in which a federal reserve bank, acting as an intermediary bank, sends a payment order to the beneficiary’s bank.

History. (§ 12 ch 34 SLA 1993)

Sec. 45.14.502. Creditor process served on receiving bank; setoff by beneficiary’s bank.

  1. This subsection applies to creditor process with respect to an authorized account of the sender of a payment order if the creditor process is served on the receiving bank. For the purpose of determining rights with respect to the creditor process, if the receiving bank accepts the payment order the balance in the authorized account is considered to be reduced by the amount of the payment order to the extent that the bank did not otherwise receive payment of the order, unless the creditor process is served at a time and in a manner affording the bank a reasonable opportunity to act on it before the bank accepts the payment order.
  2. If a beneficiary’s bank has received a payment order for payment to the beneficiary’s account in the bank, the following rules apply:
    1. the bank may credit the beneficiary’s account; the amount credited may be set off against an obligation owed by the beneficiary to the bank or may be applied to satisfy creditor process served on the bank with respect to the account;
    2. the bank may credit the beneficiary’s account and allow withdrawal of the amount credited unless creditor process with respect to the account is served at a time and in a manner affording the bank a reasonable opportunity to act to prevent withdrawal;
    3. if creditor process with respect to the beneficiary’s account has been served and the bank has had a reasonable opportunity to act on it, the bank may not reject the payment order except for a reason unrelated to the service of process.
  3. Creditor process with respect to a payment by the originator to the beneficiary in accordance with a funds transfer may be served only on the beneficiary’s bank with respect to the debt owed by that bank to the beneficiary. Another bank served with the creditor process is not obliged to act with respect to the process.
  4. In this section, “creditor process” means levy, attachment, garnishment, notice of lien, sequestration, or similar process issued by or on behalf of a creditor or other claimant with respect to an account.

History. (§ 12 ch 34 SLA 1993)

Sec. 45.14.503. Injunction or restraining order with respect to funds transfer.

  1. For proper cause and in compliance with applicable law, a court may restrain
    1. a person from issuing a payment order to initiate a funds transfer;
    2. an originator’s bank from executing the payment order of the originator; or
    3. the beneficiary’s bank from releasing funds to the beneficiary or the beneficiary from withdrawing the funds.
  2. Except as provided in (a) of this section, a court may not otherwise restrain a person from issuing a payment order, paying or receiving payment of a payment order, or otherwise acting with respect to a funds transfer.

History. (§ 12 ch 34 SLA 1993)

Sec. 45.14.504. Order in which items and payment orders may be charged to account; order of withdrawals from account.

  1. If a receiving bank has received more than one payment order of the sender or one or more payment orders and other items that are payable from the sender’s account, the bank may charge the sender’s account with respect to the various orders and items in any sequence.
  2. In determining whether a credit to an account has been withdrawn by the holder of the account or applied to a debt of the holder of the account, credits first made to the account are first withdrawn or applied.

History. (§ 12 ch 34 SLA 1993)

Sec. 45.14.505. Preclusion of objection to debit of customer’s account.

If a receiving bank has received payment from its customer with respect to a payment order issued in the name of the customer as sender and accepted by the bank, and the customer received notification reasonably identifying the order, the customer is precluded from asserting that the bank is not entitled to retain the payment unless the customer notifies the bank of the customer’s objection to the payment within one year after the notification was received by the customer.

History. (§ 12 ch 34 SLA 1993)

Sec. 45.14.506. Rate of interest.

  1. If, under this chapter, a receiving bank is obliged to pay interest with respect to a payment order issued to the bank, the amount payable may be determined
    1. by agreement of the sender and receiving bank; or
    2. by a funds-transfer system rule if the payment order is transmitted through a funds-transfer system.
  2. If the amount of interest is not determined by an agreement or rule as stated in (a) of this section, the amount is calculated by multiplying the applicable federal funds rate by the amount on which interest is payable, and then multiplying the product by the number of days for which interest is payable. The applicable federal funds rate is the average of the federal funds rates published by the Federal Reserve Bank of New York for each of the days for which interest is payable divided by 360. The federal funds rate for a day on which a published rate is not available is the same as the published rate for the next preceding day for which there is a published rate. If a receiving bank that accepted a payment order is required to refund payment to the sender of the order because the funds transfer was not completed, but the failure to complete was not due to any fault by the bank, the interest payable is reduced by a percentage equal to the reserve requirement on deposits of the receiving bank.

History. (§ 12 ch 34 SLA 1993)

Sec. 45.14.507. Choice of law.

  1. The following rules apply unless the affected parties otherwise agree or (c) — (d) of this section applies:
    1. the rights and obligations between the sender of a payment order and the receiving bank are governed by the law of the jurisdiction in which the receiving bank is located;
    2. the rights and obligations between the beneficiary’s bank and the beneficiary are governed by the law of the jurisdiction in which the beneficiary’s bank is located;
    3. the issue of when payment is made under a funds transfer by the originator to the beneficiary is governed by the law of the jurisdiction in which the beneficiary’s bank is located.
  2. If the parties described in each paragraph of (a) of this section have made an agreement selecting the law of a particular jurisdiction to govern rights and obligations between each other, the law of that jurisdiction governs those rights and obligations, whether or not the payment order or the funds transfer bears a reasonable relation to that jurisdiction.
  3. A funds-transfer system rule may select the law of a particular jurisdiction to govern
    1. rights and obligations between participating banks with respect to payment orders transmitted or processed through the system; or
    2. the rights and obligations of some or all parties to a funds transfer if a part of the funds transfer is carried out by means of the system.
  4. A choice of law made under (c)(1) of this section is binding on participating banks. A choice of law made under (c)(2) of this section is binding on the originator, other sender, or a receiving bank having notice that the funds-transfer system might be used in the funds transfer and of the choice of law by the system when the originator, other sender, or receiving bank issued or accepted a payment order. The beneficiary of a funds transfer is bound by the choice of law if, when the funds transfer is initiated, the beneficiary has notice that the funds-transfer system might be used in the funds transfer and of the choice of law by the system. The law of a jurisdiction selected under this subsection or (c) of this section may govern, whether or not that law bears a reasonable relation to the matter in issue.
  5. In the event of inconsistency between an agreement under (b) of this section and a choice-of-law rule under (c) — (d) of this section, the agreement under (b) of this section prevails.
  6. If a funds transfer is made by use of more than one funds-transfer system and there is inconsistency between choice-of-law rules of the systems, the matter in issue is governed by the law of the selected jurisdiction that has the most significant relationship to the matter in issue.

History. (§ 12 ch 34 SLA 1993)

Chapter 20. Purchase of Ore.

Sec. 45.20.010. Certain claimants in possession considered owner of ores.

A person in the actual and peaceable possession of a mining claim, under claim or color of title, and engaged in the mining, shipment and treatment, or sale of ore from it, shall, as to all persons purchasing the ore in good faith and without notice as provided in this chapter of the title or claim of title, or ownership of another person to it, be considered to be the lawful owner of the ore.

History. (§ 29-4-1 ACLA 1949)

Sec. 45.20.020. When purchaser considered owner of ore; nonliability to person subsequently adjudged owner.

A person who in good faith and in the usual course of business and without notice, as provided in this chapter, purchases and obtains delivery of ore from a person in possession of the mines or mining claim from which the ore has been mined or extracted, shall be considered the owner of the ore except as provided in this chapter; and the purchaser is not liable to, or subject to an action at law or in equity, for the recovery of the ore or the value of it by a person who is later adjudged to be the owner of the mine, or mining claim.

History. (§ 29-4-2 ACLA 1949)

Sec. 45.20.030. Notice to purchaser by claimant or owner out of possession; court action.

If a person is or claims to be the owner or entitled to the possession or enjoyment of a mine, mining claim, or premises, then in the possession of another, claiming to be the owner or entitled to the possession and mining, shipping or treating or selling the ore from it, the purchaser may, if the purchaser intends or desires to hold purchasers of or those intending to purchase the ore responsible for the value of the ore, serve upon the purchaser or intending purchaser a notice in writing, which contains the name of the mine, mining claim, or premises, the name of the person claiming or asserting ownership or right to the possession or enjoyment thereof, the name of the person in possession of and mining, shipping and selling ore from it, and warning the purchaser or intending purchaser that the purchaser or intending purchaser will be held liable and responsible for all ore purchased and delivered or to be purchased and delivered from the mine, mining claim, or premises by the person or the heirs, assigns or agents of that person subsequent to the service of the notice. Within 30 days from and after the service of the notice, the person serving it shall institute an action to enforce the person’s title against the person in possession of and mining and shipping ore from the mine, mines, mining claim, claims, or premises, and to enjoin the person in possession from the mining or shipment and sale of ores taken from them, pending the action, and at once notify the purchaser or intending purchaser of the ore of the pendency of the action. If the notice is served after the action is started, it is not necessary to begin another under this section.

History. (§ 29-4-3 ACLA 1949)

Sec. 45.20.040. Failure to bring action.

If a person claiming the title to or right of possession of a mine, mining claim, or premises, not having before then brought action, serves notice upon a purchaser or intending purchaser of ore as provided in AS 45.20.030 , and fails or neglects to begin an action as required in this chapter, the notice shall be considered to have been waived, and the party serving the notice is liable to the parties injured in full damages including costs, and the purchaser or intending purchaser is not bound by anything contained in it.

History. (§ 29-4-4 ACLA 1949)

Sec. 45.20.050. Liability of purchaser to person adjudged owner or entitled to possession.

A purchaser of ore, who receives the notice provided for in this chapter, followed or preceded by the commencement of an action, as set out in this chapter, and who purchases or continues to purchase and receive ore taken from the mine, mining claim, or premises named in the notice, is liable and responsible for the value of it to the person who is ultimately adjudged to be the owner or entitled to the possession of it.

History. (§ 29-4-5 ACLA 1949)

Chapter 25. Motor Vehicle Transactions.

Cross references. —

For provision providing legislative findings and intent for the 2018 amendments to this chapter, see sec. 1, ch. 50, SLA 2018, in the 2018 Temporary and Special Acts.

Editor’s notes. —

Section 15, ch. 79, SLA 2002, provides that this chapter applies to a franchise that is entered into on or after July 1, 2002.

Article 1. Applicability; Jurisdiction; Venue; Corporate Affiliates.

Sec. 45.25.010. Applicability.

AS 45.25.020 45.25.310 apply to franchise agreements between a manufacturer and its new motor vehicle dealers in this state.

History. (§ 9 ch 79 SLA 2002; am § 2 ch 50 SLA 2018)

Effect of amendments. —

The 2018 amendment, effective September 30, 2018, rewrote the section, which read, “AS 45.25.020 45.25.320 apply to franchise contracts between a manufacturer and its new motor vehicle dealers in this state.”

Sec. 45.25.020. Jurisdiction; venue.

  1. The courts of this state have jurisdiction over a legal dispute between a manufacturer located in or outside this state and a new motor vehicle dealer located in this state, and the dispute is governed by and interpreted and adjudicated under the law of this state.
  2. Venue for a dispute under (a) of this section is in the judicial district of this state where the new motor vehicle dealer’s principal place of business is located.

History. (§ 9 ch 79 SLA 2002)

Cross references. —

For the effect of subsection (b) on Rule 3, Alaska Rules of Civil Procedure, see § 14, ch. 79, SLA 2002, in the 2002 Temporary and Special Acts.

Sec. 45.25.030. Corporate affiliates.

  1. A manufacturer may not use a subsidiary corporation, affiliated corporation, partnership, association, or other person to accomplish what would be prohibited for the manufacturer under this chapter.
  2. This section does not limit the right of a person included within the scope of this section to engage in reasonable and appropriate business practices consistent with an existing trade practice that is not prohibited by this chapter.

History. (§ 9 ch 79 SLA 2002)

Article 2. Franchise Agreements.

Sec. 45.25.100. Consistency with state law.

The terms and conditions in an agreement between a manufacturer and a new motor vehicle dealer in this state, including a motor vehicle franchise agreement, that are inconsistent with the law of this state do not have any force or effect in this state.

History. (§ 9 ch 79 SLA 2002)

Sec. 45.25.110. Termination of franchise agreements.

  1. A manufacturer may not terminate a franchise agreement with a new motor vehicle dealer unless
    1. the manufacturer has
      1. complied with the notice requirements of this chapter; and
      2. shown that there is good cause for the termination of the franchise agreement, and, if the reasons underlying the good cause can be corrected by the new motor vehicle dealer, the new motor vehicle dealer has failed for 120 days after delivery of the notice required by AS 45.25.120 to make the corrections; the circumstances identified under AS 45.25.120(a)(2) for which a 15-day notice of termination is required do not qualify as reasons for which correction is allowed under this subparagraph; or
    2. the new motor vehicle dealer has systematically engaged in fraud against consumers or the manufacturer or in the operation of the new motor vehicle dealership.
  2. Notwithstanding (a)(1) of this section, a manufacturer may not terminate a franchise agreement with a new motor vehicle dealer because of the death or incapacity of an owner if the owner is not listed in the franchise as one on whose expertise and abilities the manufacturer relied in the granting of the franchise.
  3. In this section, “good cause” includes when the new motor vehicle dealer fails to comply with or observe a material provision of the franchise agreement. For the purposes of determining good cause under this subsection, reasonable sales and service performance criteria and capital and facility requirements may be considered material provisions only if the criteria or requirements were communicated in writing to the new motor vehicle dealer within a reasonable period before the effective date of the termination or nonrenewal so that a reasonable opportunity was afforded over a period of not less than six months to comply with the criteria or requirements.
  4. A failure of a new motor vehicle dealer under (a) of this section that relates to the performance of the new motor vehicle dealer in sales, service, or level of customer satisfaction does not amount to good cause under this section if the new motor vehicle dealer failed to comply and the failure to comply was caused by
    1. an insufficient supply of new motor vehicles; or
    2. market, economic, or other factors that exist within the new motor vehicle dealer’s relevant market area and that were beyond the control of the new motor vehicle dealer.

History. (§ 9 ch 79 SLA 2002; am §§ 3, 4 ch 50 SLA 2018)

Effect of amendments. —

The 2018 amendment, effective September 30, 2018, in (a), twice added “agreement” following “franchise”, in (a)(1)(A), substituted “complied with” for “satisfied” at the beginning, in (a)(1)(B), substituted “120 days” for “60 days” following “failed for”, and substituted “subparagraph” for “paragraph” at the end; added (d).

Sec. 45.25.120. Notice of termination.

  1. A manufacturer shall furnish a notice of termination of a franchise agreement to a new motor vehicle dealer at least
    1. 90 days before the effective date of a termination, except as required under (2) or (3) of this subsection;
    2. 15 days before the effective date of a termination when the new motor vehicle dealer
      1. is insolvent or is the subject of a bankruptcy or receivership proceeding;
      2. has failed to conduct its customary sales and service operations during its customary business hours for seven consecutive business days; this subparagraph does not apply to closures due to acts of God or circumstances beyond the direct control of the new motor vehicle dealer; or
      3. is convicted of a felony involving moral turpitude or fraud under the law of this state, another state, the federal government, a territory of the United States, or the District of Columbia;
    3. 180 days before the effective date of the termination if the manufacturer or distributor is discontinuing the sale of the product line.
  2. Notice required under (a) of this section must be in writing, shall be sent by certified mail or personally delivered to the new motor vehicle dealer, and must contain
    1. a statement of intention to terminate the franchise;
    2. a statement of the reasons for the termination; and
    3. the date on which the termination takes effect.

History. (§ 9 ch 79 SLA 2002)

Sec. 45.25.130. Threat of termination.

  1. A manufacturer or manufacturer representative may not coerce or attempt to coerce a new motor vehicle dealer to enter into an agreement with the manufacturer or a subsidiary of the manufacturer, or to do any other act unfair to the new motor vehicle dealer, by threatening to terminate a franchise agreement between the manufacturer or subsidiary of the manufacturer and the new motor vehicle dealer.
  2. This section does not prohibit a voluntary agreement between a manufacturer and a new motor vehicle dealer or between a distributor and a new motor vehicle dealer to settle legitimate disputes.

History. (§ 9 ch 79 SLA 2002)

Sec. 45.25.140. Repurchase obligations on termination.

  1. Upon the termination of a new motor vehicle dealer’s franchise agreement by the manufacturer or distributor, the manufacturer or distributor shall repurchase from the new motor vehicle dealer at
    1. the new motor vehicle dealer’s net acquisition cost, if the motor vehicles have not been materially altered or damaged, all inventory consisting of unsold new motor vehicles that are current models;
    2. the new motor vehicle dealer’s net acquisition cost, new motor vehicle models from the previous year that have been acquired from the manufacturer within the past two years before receipt of the notice of termination, but an adjustment based on mileage over 500 miles may be made;
    3. the new motor vehicle dealer price listed in the current manufacturer’s parts catalog, less applicable allowances, new unused undamaged parts in their original, unbroken packaging and acquired from the manufacturer or distributor;
    4. fair market value, signs, equipment, and furnishings that bear the manufacturer’s trademark or trade name, that have not been altered or damaged, and that were required by the manufacturer or distributor within five years preceding the notice of termination;
    5. the new motor vehicle dealer’s net acquisition cost, special tools that have not been altered or materially damaged and that were purchased from the manufacturer or distributor within three years preceding the date of the termination; and
    6. the lesser of the fair market value or the depreciated value, all manufacturer required computers, printers, and other electronic hardware, and electronic software, except that, if the new motor vehicle dealer leases the computers, printers, or other electronic hardware, or electronic software, the manufacturer shall pay the new motor vehicle dealer the amount of money that is required for the new motor vehicle dealer to terminate the lease under the lease agreement.
  2. Within 90 days after the effective date of the termination, the new motor vehicle dealer shall return the property required by (a) of this section to be repurchased to the manufacturer or distributor at the manufacturer’s or distributor’s expense. The manufacturer or distributor shall pay the compensation for the property within 60 days after the tender of inventory and other items if the new motor vehicle dealer has clear title to the property and is in a position to convey that title to the manufacturer or distributor. If the property is subject to a security interest, the manufacturer or distributor may make payment jointly to the new motor vehicle dealer and the holder of the security interest, and the manufacturer or distributor may offset these payments.

History. (§ 9 ch 79 SLA 2002; am § 5 ch 50 SLA 2018)

Effect of amendments. —

The 2018 amendment, effective September 30, 2018, in (a), in (a)(2), substituted “the new motor vehicle dealer's net acquisition cost, new motor vehicle models from the previous years” for “and models”, deleted “model” following “within the past two” and added “, but an adjustment based on mileage over 500 miles may be made” at the end; in (a)(3) inserted “manufacturer's” following “listed in the current” and deleted “, listed in the current price catalog” following “unbroken packaging”, in (a)(4), substituted “the manufacturer's trademark” for “a trademark” following “furnishings that bear”, in (a)(5), added “and” following “materially damaged”, added (a)(6), and made related and stylistic changes throughout the subsection.

Sec. 45.25.150. Required compensation for new motor vehicle dealer facilities.

  1. Upon termination by the manufacturer or distributor, the manufacturer or distributor shall compensate the new motor vehicle dealer for new motor vehicle dealer facilities a sum equivalent to the
    1. rent for the unexpired term of the lease or 18 months, whichever period is shorter, if the new motor vehicle dealer is leasing the new motor vehicle dealership facilities from a lessor other than the manufacturer or distributor; or
    2. reasonable rental value of the new motor vehicle dealership facilities for 18 months or until the facilities are leased or sold, whichever period is shorter, if the new motor vehicle dealer owns the new motor vehicle dealership facilities; the sum may be paid in monthly installments at the election of the manufacturer or distributor.
  2. This section does not relieve a new motor vehicle dealer of the obligation to mitigate
    1. damages under a lease, prevent a manufacturer from occupying and using the new motor vehicle dealer’s facilities while paying rent, or preclude a manufacturer from negotiating a lease termination, sublease, or new lease; or
    2. the costs of the relocation, substantial alteration, and remodeling of the new motor vehicle dealer’s facilities for which payments are required under (f) of this section.
  3. This section does not apply to a termination for
    1. insolvency of the new motor vehicle dealer or the filing of any petition by or against the new motor vehicle dealer under a bankruptcy or receivership law;
    2. failure of the new motor vehicle dealer to conduct its customary sales and service operations during its customary business hours for seven consecutive business days;
    3. conviction of the new motor vehicle dealer or its principal owners of a felony or a misdemeanor regardless of the punishment if the crime involves theft, dishonesty, or false statement;
    4. revocation of a license required for the new motor vehicle dealer to operate; or
    5. a fraudulent misrepresentation by the new motor vehicle dealer to the manufacturer or distributor that is material to the new motor vehicle dealer’s agreement.
  4. The payment required under (a) of this section is only required to the extent that the facilities were used for activities under the franchise agreement and only to the extent the facilities were not leased for unrelated purposes.
  5. If payment under (a) of this section is made, the manufacturer or distributor is entitled to possession and use of the new motor vehicle dealership facilities for the period for which the payment is paid.
  6. In addition to the payment required under AS 45.25.140 and (a) of this section, upon termination of a franchise agreement by the manufacturer under this chapter, the manufacturer shall, at the request and option of the new motor vehicle dealer, pay the new motor vehicle dealer the new motor vehicle dealer’s cost for a relocation, substantial alteration, or remodeling of the new motor vehicle dealer’s facilities to the extent used for the manufacturer’s franchise, if
    1. the manufacturer required the relocation, substantial alteration, or remodeling of the new motor vehicle dealer’s facilities for a continuation or renewal of the franchise agreement; and
    2. the relocation, substantial alteration, or remodeling of the new motor vehicle dealer’s facilities was completed within three years before the termination or is in process when the new motor vehicle dealer receives the notice of termination.

History. (§ 9 ch 79 SLA 2002; am §§ 6, 7 ch 50 SLA 2018)

Effect of amendments. —

The 2018 amendment, effective September 30, 2018, added (b)(2), and made related changes; added (f).

Sec. 45.25.160. Prevention of or refusal to honor transfer of new motor vehicle dealership ownership.

  1. A manufacturer may not unreasonably prevent or refuse to honor the transfer of ownership of a new motor vehicle dealership to a buyer who is capable of being licensed as a new motor vehicle dealer in this state and who meets the standards established by the manufacturer, if the standards are reasonable and applied uniformly.
  2. Within 30 days after receipt of a written request from a new motor vehicle dealer for transfer of the ownership of a new motor vehicle dealership, a manufacturer may request, and the new motor vehicle dealer shall promptly provide, supplementary information that is reasonably necessary for the manufacturer to determine whether the manufacturer will approve the request for the transfer. If a manufacturer refuses to approve the transfer, the manufacturer shall give written notice to the new motor vehicle dealer of the refusal. The manufacturer shall give the notice to the new motor vehicle dealer within 75 days after the date the manufacturer has received both the written transfer request and supplementary information requested under this subsection. The notice must state the specific grounds for the refusal to approve the transfer. The manufacturer shall give the notice under this subsection by personal service or certified mail with return receipt requested. If the manufacturer does not give the notice within the time allowed under this subsection and does not exercise a right of first refusal under (c) of this section, the request shall be considered approved.
  3. A manufacturer or distributor may exercise a contractual right of first refusal with respect to the proposed sale or other transfer of the interest of the dealer in a new motor vehicle dealership if
    1. the sale or other transfer is to a person who is not a family member of an owner of the dealership, a managerial employee of the dealership owning 15 percent or more of the dealership, or a corporation, partnership, or other legal entity owned by the existing owners of the dealership; in this paragraph, “family member” means
      1. the spouse of an owner of the dealership;
      2. the child, stepchild, grandchild, brother, sister, or parent of an owner of the dealership; or
      3. a spouse of a person identified in (B) of this paragraph;
    2. the manufacturer or distributor notifies the new motor vehicle dealer in writing of the intent to exercise the right of first refusal; within 30 days after receipt of a written request from a new motor vehicle dealer for transfer of the ownership of a new motor vehicle dealership, a manufacturer or distributor may request, and the new motor vehicle dealer shall promptly provide, related information generally used by a manufacturer or distributor to conduct its review of a proposed intent to exercise the right of first refusal and supplementary information that is reasonably necessary for the manufacturer or distributor to determine whether the manufacturer or distributor will exercise the right of first refusal; if the manufacturer or distributor decides to exercise the right of first refusal, the manufacturer or distributor shall give written notice to the new motor vehicle dealer of the decision within 75 days after receiving the completed transfer request, related information, and requested supplementary information; the manufacturer or distributor shall give the notice under this paragraph by personal service or certified mail with return receipt requested; if the manufacturer or distributor fails to notify the dealer within the 75-day period that the manufacturer or distributor will exercise the right of first refusal, the manufacturer or distributor may not exercise the right of first refusal;
    3. the exercise of the right of first refusal provides to the new motor vehicle dealer the same compensation as, or greater compensation than, the new motor vehicle dealer had negotiated to receive from the proposed buyer or other transferee; and
    4. the manufacturer or distributor agrees to pay the reasonable expenses, including reasonable attorney and accountant fees that do not exceed the usual, customary, and reasonable fees charged for similar work done in the state for other clients, incurred before the manufacturer or distributor exercised its right of first refusal by the proposed buyer or transferee to negotiate and implement the terms of the contract for the sale or transfer.

History. (§ 9 ch 79 SLA 2002; am § 8 ch 50 SLA 2018)

Effect of amendments. —

The 2018 amendment, effective September 30, 2018, rewrote the section.

Sec. 45.25.170. Succession.

  1. A manufacturer or distributor may not prevent or refuse to honor the succession to a new motor vehicle franchise of an heir or devisee under a will of a franchisee, under a written instrument filed with the manufacturer or distributor designating any person as the successor franchisee, or under AS 13.06 — AS 13.36 (Uniform Probate Code), except that
    1. a designated successor must, within 60 days after the owner’s death or incapacity, give the manufacturer or distributor written notice of the intent to succeed, and the designee must agree to be bound by all the terms and conditions of the current franchise agreement;
    2. the manufacturer or distributor may request from the designated successor personal and financial data that are reasonably necessary to determine the qualifications of the designated successor; the designated successor shall provide the information within 60 days after receiving the request;
    3. the manufacturer or distributor may not unreasonably withhold approval of the succession; if the manufacturer or distributor refuses to honor the succession, the manufacturer or distributor shall send written notice to the proposed successor within 60 days after receiving the information requested in (2) of this subsection or within 60 days after receiving the notice of the proposed successor’s intent to succeed, whichever is later.
  2. The notice required by (a)(3) of this section must state the specific grounds for not approving the proposed successor. Within 30 days after the proposed successor’s receipt of the notice, the proposed successor may file a protest with the superior court to determine whether the manufacturer or distributor has unreasonably withheld approval.
  3. This section does not preclude the owner of a new motor vehicle dealership from filing with the manufacturer or distributor a written instrument designating any person as a successor. If there are competing successors, the written instrument governs who may submit a proposal as a successor.

History. (§ 9 ch 79 SLA 2002)

Sec. 45.25.180. New dealerships.

  1. Before a manufacturer or distributor enters into a franchise establishing or relocating a new motor vehicle dealer within a relevant market area where the same line make is represented, the manufacturer or distributor shall give 90 days’ written notice to each new motor vehicle dealer of the same line make in the relevant market area of the intention to establish an additional new motor vehicle dealer or to relocate an existing new motor vehicle dealer within that relevant market area.
  2. Within 30 days after receiving the notice required under (a) of this section or within 30 days after the end of any appeal procedure provided by the manufacturer or distributor, a new motor vehicle dealer may bring a declaratory judgment action in the superior court of this state to determine whether good cause exists for the establishment or relocation of a proposed new motor vehicle dealer. If an action is filed, the manufacturer or distributor may not establish or relocate the proposed new motor vehicle dealer until the court has rendered a decision on the matter.
  3. This section does not prohibit
    1. the relocation of an existing new motor vehicle dealer to a new location not within four miles of an existing new motor vehicle dealer;
    2. the appointment of a successor new motor vehicle dealer at the same location as its predecessor or within a two-mile radius from any boundary of the predecessor’s former location within two years from the date when the predecessor ceased operations or was terminated, whichever occurred later; or
    3. the entering into of a renewal of, replacement of, or succeeding franchise agreement with an existing new motor vehicle dealer whose operations will continue at the existing new motor vehicle dealer’s current location.
  4. When determining whether good cause exists for establishing or relocating an additional new motor vehicle dealer for the same line make, the superior court shall consider the existing circumstances, including
    1. whether the establishment of an additional franchise or relocation of the existing new motor vehicle dealer appears to be warranted by economic and marketing conditions, including anticipated future changes;
    2. the retail sales and service business transacted by the protesting new motor vehicle dealer and other new motor vehicle dealers of the same line make with a place of business in the relevant market area to be served by the additional franchise or proposed new location of an existing new motor vehicle dealer during the three-year period immediately preceding the notice;
    3. the investment necessarily made and obligations incurred by the protesting new motor vehicle dealer to perform the protesting new motor vehicle dealer’s obligations under existing franchise agreements;
    4. the permanency of the investment of the protesting new motor vehicle dealer;
    5. whether it is beneficial or injurious to the public welfare for an additional franchise to be established or for the existing new motor vehicle dealer to be relocated;
    6. whether the manufacturer has denied the manufacturer’s existing new motor vehicle dealer of the same line make the opportunity for reasonable growth, market expansion, or relocation; and
    7. whether the proposed relocation is farther away from the protesting new motor vehicle dealer.
  5. Under this section, a manufacturer has the burden of proving that good cause exists for permitting the proposed establishment or relocation of a new motor vehicle dealer that the manufacturer has proposed, and the new motor vehicle dealer has the burden of proving that good cause exists for permitting the proposed establishment or relocation of a new motor vehicle dealer that the new motor vehicle dealer has proposed.
  6. In this section,
    1. “relevant market area” means the greater of the area
      1. within a radius of 14 miles around an existing new motor vehicle dealer; or
      2. of responsibility defined in a governing franchise agreement;
    2. “relocate” and “relocation” do not include the relocation of a new motor vehicle dealer within two miles of the new motor vehicle dealer’s established place of business.

History. (§ 9 ch 79 SLA 2002; am §§ 9, 10 ch 50 SLA 2018)

Revisor's notes. —

Subsection (e) was enacted as (f); relettered in 2018, at which time existing subsection (e) was relettered as (f).

Effect of amendments. —

The 2018 amendment, effective September 30, 2018, added (d)(6) and (7), and made related changes; added (f) [now (e)].

Sec. 45.25.190. Arbitration.

In a controversy between a manufacturer and a new motor vehicle dealer under AS 45.25.010 45.25.310 , neither the manufacturer nor the new motor vehicle dealer is required to submit the controversy to arbitration. If both the manufacturer and the new motor vehicle dealer agree to submit a controversy under AS 45.25.010 45.25.310 to arbitration, the arbitration shall be conducted under AS 09.43.010 09.43.180 (Uniform Arbitration Act) or AS 09.43.300 09.43.595 (Revised Uniform Arbitration Act), as applicable, the manufacturer and the new motor vehicle dealer shall each select one arbitrator, and both the manufacturer and the new motor vehicle dealer shall select the third arbitrator.

History. (§ 9 ch 79 SLA 2002; am § 48 ch 40 SLA 2008; am § 43 ch 22 SLA 2015; am § 11 ch 50 SLA 2018)

Effect of amendments. —

The 2015 amendment, effective July 1, 2015, substituted “shall be conducted under AS 09.43.010 09.43.180 ” for “shall be conducted under AS 09.43.020 09.43.180 ”.

The 2018 amendment, effective September 30, 2018, twice substituted “AS 45.25.010 45.25.310 ” for “AS 45.25.010 45.25.320 ”.

Sec. 45.25.200. Payment and approval of claims.

  1. A manufacturer shall pay a new motor vehicle dealer for all warranty work. The manufacturer may not deny a claim for warranty work to resolve a condition discovered and properly repaired by the dealer during the course of a separate repair, if the dealer provides the required documentation demonstrating the need for the repair. A manufacturer shall pay the new motor vehicle dealer for the approved warranty repairs in accordance with the schedule of compensation that applies to the repairs when the new motor vehicle dealer makes the repairs.
  2. A new motor vehicle dealer shall submit a claim for warranty work to the manufacturer within 90 days after the new motor vehicle dealer completes the work on the new motor vehicle. The new motor vehicle dealer shall submit the claim in the manner that the manufacturer requires.
  3. Within 30 days after the manufacturer receives a claim from a new motor vehicle dealer under (b) of this section, the manufacturer shall approve or disapprove the claim in writing or electronically. If a manufacturer does not disapprove a claim as required by this subsection, the claim is considered approved. The manufacturer shall pay the claim within 30 days after the approval of the claim.
  4. If a manufacturer disapproves a claim that the new motor vehicle dealer submits under (b) of this section, a manufacturer shall notify the new motor vehicle dealer in writing or electronically and shall state the reasons for disapproving the claim. A new motor vehicle dealer may correct and resubmit the claim within 30 days after the new motor vehicle dealer receives the written or electronic notice that the manufacturer disapproved the claim.
  5. A manufacturer may not initiate or conduct an audit to determine the validity of paid claims for new motor vehicle dealer warranty work unless the manufacturer initiates the audit within one year after the payment of the claim. The manufacturer may not perform more than one audit in a calendar year to determine the validity of paid claims for new motor vehicle dealer warranty work.
  6. A manufacturer may not initiate or conduct an audit to determine the validity of paid incentive claims unless the manufacturer initiates the audit within one year after the payment of the claim or the conclusion of the incentive program, whichever event occurs later. The manufacturer may not perform more than one audit in a calendar year to determine the validity of paid incentive claims.
  7. Notwithstanding the limitations under (e) and (f) of this section, if a manufacturer reasonably suspects fraud, the manufacturer may audit a dealer for fraudulent claims during any period in which an action for fraud may be commenced under applicable state law.

History. (§ 12 ch 50 SLA 2018)

Effective dates. —

Section 12, ch. 50, SLA 2018, which enacted this section, took effect on September 30, 2018.

Sec. 45.25.210. Rates for warranty and other work.

  1. A manufacturer shall provide each of its new motor vehicle dealers with the schedule of compensation that the manufacturer shall pay to the new motor vehicle dealer for warranty work that the manufacturer requires the new motor vehicle dealer to perform for the manufacturer’s products.
  2. The schedule of compensation must include compensation for parts and labor and must comply with this section. The compensation for parts must include the average retail percentage markup that the new motor vehicle dealer charges.
  3. Unless otherwise agreed to by the manufacturer and the new motor vehicle dealer, the rates in the schedule of compensation may not be less than the rates that the new motor vehicle dealer charges retail customers for similar nonwarranty service work.
  4. To establish the retail percentage markup, the new motor vehicle dealer shall submit to the manufacturer 100 sequential chronologically issued retail service repair orders paid by customers for warranty-like repairs, or 90 consecutive days of retail service repair orders paid by customers for warranty-like repairs, whichever number of retail service repair orders is less.  The retail service repair orders that the new motor vehicle dealer submits must cover retail repairs that the new motor vehicle dealer made less than 180 days before the new motor vehicle dealer submits them to the manufacturer.
  5. A manufacturer may not require a new motor vehicle dealer to establish the retail percentage markup by a method other than the method required by (d) of this section. When establishing the retail percentage markup, a manufacturer may not require the new motor vehicle dealer to provide information that is unduly burdensome or time consuming to provide, including part-by-part or transaction-by- transaction calculations.
  6. A manufacturer may not include in the calculation of the rates in the schedule of compensation
    1. repairs for manufacturer special events, manufacturer specials, or manufacturer promotional discounts;
    2. parts sold at wholesale;
    3. routine maintenance not covered under warranty, including the replacement of fluids, filters, and belts, unless the new motor vehicle dealer provides the routine maintenance in the course of making a repair;
    4. nuts, bolts, fasteners, and similar items that do not have an individual part number;
    5. tires, batteries, and light bulbs;
    6. vehicle reconditioning; and
    7. repair orders for motor vehicle body repairs if an insurer pays for the repairs.
  7. The retail percentage markup calculated under (d) of this section may not take effect more than 30 days after the manufacturer approves the dealer’s proposed rate, or after the manufacturer is considered to have approved the dealer’s proposed rate under this section. If a manufacturer does not disapprove the dealer’s proposed rate within 30 days after the new motor vehicle dealer submits the rate application, then the dealer’s proposed rate shall be considered approved.
  8. A manufacturer may disapprove a rate proposed by the new motor vehicle dealer under this section if the manufacturer demonstrates that the proposed rate is materially miscalculated or unreasonable compared to other similarly situated new motor vehicle dealers in this state.
  9. A new motor vehicle dealer may not receive more than one rate increase under this section in a calendar year.

History. (§ 12 ch 50 SLA 2018)

Effective dates. —

Section 12, ch. 50, SLA 2018, which enacted this section, took effect on September 30, 2018.

Sec. 45.25.220. Performance and reimbursement of certain repairs.

  1. Except as provided in (b) of this section, if a new motor vehicle needs repairs that are covered under a manufacturer’s warranty, and if the new motor vehicle is located in a remote location, the manufacturer shall make reasonable efforts to arrange for the new motor vehicle to be repaired in the remote location.
  2. If a manufacturer determines that repairs cannot reasonably be made in a remote location within the manufacturer’s guidelines, the manufacturer may arrange, at no cost to the owner of the new motor vehicle, to ship the new motor vehicle to a repair facility outside of the remote location and to return the new motor vehicle to the remote location after the repairs are completed.
  3. A manufacturer may direct a new motor vehicle dealer of the manufacturer to refer customers of the new motor vehicle dealer to the manufacturer if the new motor vehicles of the customers are located in remote locations and need repairs.
  4. This section does not prohibit a manufacturer from allowing a new motor vehicle dealer to subcontract warranty work for a specific new motor vehicle that is located in a remote location. If the manufacturer allows the new motor vehicle dealer to subcontract the warranty work, the manufacturer shall compensate the new motor vehicle dealer for the subcontracted warranty work paid for by the new motor vehicle dealer.
  5. In this section, “remote location” means a location that is not accessible by road or that is more than 100 road miles from a new motor vehicle dealer that is authorized to perform warranty work on new motor vehicles.

History. (§ 12 ch 50 SLA 2018)

Effective dates. —

Section 12, ch. 50, SLA 2018, which enacted this section, took effect on September 30, 2018.

Sec. 45.25.230. Preparation and service before delivery.

A manufacturer and a distributor shall provide in writing the following information to their new motor vehicle dealers about new motor vehicles and other products received from the manufacturer or distributor:

  1. the specific obligations of the new motor vehicle dealer to prepare and service new motor vehicles and products before delivery of the new motor vehicles and products to buyers;
  2. the compensation that the manufacturer or distributor will pay the dealer for performing the preparation and service obligations described in (1) of this section; and
  3. the amount of time that the manufacturer or distributor will allow the new motor vehicle dealer for performing the preparation and service obligations described in (1) of this section.

History. (§ 12 ch 50 SLA 2018)

Effective dates. —

Section 12, ch. 50, SLA 2018, which enacted this section, took effect on September 30, 2018.

Article 3. Manufacturer and Distributor Practices.

Sec. 45.25.300. Unfair practices.

A manufacturer may not

  1. require, coerce, or attempt to coerce a new motor vehicle dealer to change the location of the new motor vehicle dealership or to make any substantial alterations to the new motor vehicle dealership premises or facilities if the alterations would be unreasonable or if there is not expected to be a sufficient supply of new motor vehicles to justify the change of location or the alterations because of market and economic conditions; this paragraph does not apply to alterations that are necessary to comply with health or safety laws; in this paragraph, “substantial alterations” does not include erecting signs subject to the manufacturer’s intellectual property rights, doing interior painting that is necessary to keep a new motor vehicle dealer facility in an attractive condition, or performing routine maintenance;
  2. require a new motor vehicle dealer to purchase or include in inventory a predetermined number or percentage of certified pre-owned motor vehicles or lease return motor vehicles;
  3. except because of reasons beyond the manufacturer’s control, refuse or fail to deliver or offer for sale in reasonable quantities to a new motor vehicle dealer holding a franchise for a line make of new motor vehicles sold or distributed by the manufacturer a new motor vehicle, part, or accessory, if the new motor vehicle, part, or accessory is being delivered to other new motor vehicle dealers; this paragraph does not apply to limited edition or limited release vehicle parts or accessories;
  4. require a new motor vehicle dealer to purchase unreasonable advertising displays or other materials or an unreasonable number of signs;
  5. require a new motor vehicle dealer to order or accept delivery of a new motor vehicle, part, accessory, piece of equipment, promotional material, display device, display decoration, or other item that is not otherwise required by law and that the new motor vehicle dealer does not voluntarily order; this paragraph does not apply to safety and emissions recall campaign parts or to a motor vehicle feature, part, accessory, or other component required by federal law, the law of this state, or local law;
  6. coerce, attempt to coerce, or require a new motor vehicle dealer to
    1. join, contribute money to, or affiliate with an advertising association; or
    2. participate monetarily in an advertising campaign; or
  7. increase the price of a new motor vehicle that the new motor vehicle dealer has ordered from the manufacturer and for which there exists at the time of the order a bona fide sale to a retail or fleet purchaser if the dealer submitted the order to the manufacturer before the manufacturer provided the new motor vehicle dealer with an official written price increase notification.

History. (§ 9 ch 79 SLA 2002; am § 13 ch 50 SLA 2018)

Effect of amendments. —

The 2018 amendment, effective September 30, 2018, rewrote the section.

Sec. 45.25.310. Discrimination.

A manufacturer may not unfairly discriminate among new motor vehicle dealers with respect to warranty reimbursements or authority granted new motor vehicle dealers to make warranty adjustments with retail customers.

History. (§ 9 ch 79 SLA 2002)

Sec. 45.25.320. Time limits on claim audits, claim denials, claim reductions, and charge backs.

History. [Repealed, § 16 ch 50 SLA 2018.]

Article 4. Dealer Practices.

Cross references. —

For violation of AS 45.25.400 45.25.590 as an unlawful trade practice, see AS 45.50.471(b) .

Sec. 45.25.400. Prohibited use of advertising terms.

  1. A motor vehicle dealer may not use the term “invoice,” “factory invoice,” “dealer invoice,” “dealer cost,” “wholesale price,” or any other term of similar meaning in an advertisement for the sale of a motor vehicle.
  2. A motor vehicle dealer may use the term “manufacturer’s suggested retail price,” “MSRP,” or “list price” in an advertisement for the sale of a motor vehicle, subject to the restriction on price comparisons in AS 45.25.450 and the following:
    1. the manufacturer’s suggested retail price or list price must reference the final price listed by the manufacturer on the Monroney sticker, including accessories and options physically attached to the vehicle at the time of delivery to the dealer, plus any transportation charges;
    2. the manufacturer’s suggested retail price or the list price does not include charges added by the dealer or options added to the vehicle by the dealer; and
    3. whenever using the term “manufacturer’s suggested retail price,” “MSRP,” or “list price,” the dealer may not represent that a buyer would save money by paying a price that is lower than the “manufacturer’s suggested retail price,” “MSRP,” or “list price” unless the representation refers to savings from the “manufacturer’s suggested retail price,” “MSRP,” or “list price.”

History. (§ 9 ch 79 SLA 2002; am § 1 ch 171 SLA 2004; am § 1 ch 50 SLA 2012)

Effect of amendments. —

The 2012 amendment, effective August 27, 2012, in (b)(1), substituted “manufacturer’s suggested retail price or list” for “advertised”; and deleted “, and minus all manufacturer discounts and savings” at the end; in (b)(3), added “unless the representation refers to savings from the ‘manufacturer’s suggested retail price,’ ‘MSRP,’ or ‘list price’.” at the end; made related stylistic changes.

Notes to Decisions

Quoted in

Weimer v. Cont'l Car & Truck, LLC, 237 P.3d 610 (Alaska 2010).

Sec. 45.25.410. Availability of advertised items.

A motor vehicle dealer may not advertise a new motor vehicle at a specified dealer price with the intent not to supply reasonably expected demand, unless the advertisement discloses the number of vehicles in stock at the advertised price.

History. (§ 9 ch 79 SLA 2002; am § 2 ch 171 SLA 2004)

Sec. 45.25.420. Display of motor vehicles.

A motor vehicle dealer shall display all vehicles advertised for sale for the duration of the sale period in a conspicuous and clearly visible location on the dealer’s premises. The advertised sale price for each vehicle must be clearly marked on the vehicle so the consumer can readily identify the advertised price for the vehicle.

History. (§ 9 ch 79 SLA 2002)

Sec. 45.25.430. Refusal to sell on advertised terms and conditions.

A motor vehicle dealer may not refuse to sell a motor vehicle on the terms and conditions that the dealer has advertised. This section does not apply if

  1. the dealer can document that the advertised term or condition was the result of an error on the part of the advertising medium or an outside advertising agent; or
  2. the refusal is based on an error that was made in good faith by the dealer and was clearly and conspicuously a mistake, and the dealer corrected the error as soon as the dealer knew or reasonably should have known of the error.

History. (§ 9 ch 79 SLA 2002)

Sec. 45.25.440. Advertised price.

A motor vehicle dealer’s advertised price for a motor vehicle must include all dealer fees and costs, except for fees, such as licensing fees, registration fees, title transfer fees, and sales taxes, actually paid to a government agency. In this section, “dealer fees and costs” includes dealer preparation fees, document preparation fees, surcharges, and other dealer-imposed fees and costs.

History. (§ 9 ch 79 SLA 2002; am § 2 ch 50 SLA 2012)

Effect of amendments. —

The 2012 amendment, effective August 27, 2012, rewrote the section.

Notes to Decisions

Class action. —

Consumers argued that a consent judgment impaired their interests under this section. Nevertheless, the superior court properly denied the consumers’ motion to intervene in the consent judgment proceeding against car dealerships because the consumers had opted out so they could still argue their position in their private class action. Neese v. State, 218 P.3d 983 (Alaska), modified, — P.3d — (Alaska 2009).

Sec. 45.25.450. Advertised price comparisons, reductions, and discounts.

  1. A motor vehicle dealer may not make a price comparison, price reduction, or price discount in an advertisement unless the comparison, reduction, or discount complies with this section.
  2. A motor vehicle dealer may advertise a price comparison for a new motor vehicle with the manufacturer’s suggested retail price only if
    1. the dealer only uses the term “manufacturer’s suggested retail price,” “MSRP,” or “list price”;
    2. the advertised price references the final price listed by the manufacturer on the Monroney sticker; and
    3. the manufacturer’s suggested retail price, MSRP, or list price does not include charges added by the dealer or options added to the vehicle by the dealer.
  3. A motor vehicle dealer may not use a competitor’s price as a reference price unless
    1. the reference price is the competitor’s current, bona fide price in the trade area of the dealer making the comparison;
    2. the comparison is to an identical or nearly identical vehicle that does not materially differ in model, style, design, name, brand, kind, or quality from the advertised product; and
    3. the dealer includes in the advertised price all charges that the competitor includes in the competitor’s price.
  4. A motor vehicle dealer shall be in possession of documents and all other information necessary to substantiate all reference price claims when the claims are made and shall maintain this information in a readily accessible place for two years after the time the reference price claims are made.
  5. A motor vehicle dealer may advertise a price comparison for a used motor vehicle only if the reference price is the retail value of the vehicle as specified in the current edition of a nationally recognized valuation publication for used motor vehicles.
  6. When advertising a price comparison for a used motor vehicle, the advertisement must identify the source of the reference price, and the motor vehicle dealer shall make this source available to a potential retail buyer on request.

History. (§ 9 ch 79 SLA 2002; am §§ 3, 4 ch 50 SLA 2012)

Effect of amendments. —

The 2012 amendment, effective August 27, 2012, deleted (b)(4) and (b)(5), and made related stylistic changes; added (e) and (f).

Sec. 45.25.460. Advertising and selling practices generally.

  1. In addition to the provisions of AS 45.50.471 and regulations adopted under AS 45.50.471 , a motor vehicle dealer
    1. may not represent the dealer document preparation fee as a government fee;
    2. may not advertise a specific motor vehicle for sale unless the vehicle identification number, vehicle stocking number, or license number is disclosed in the advertisement or made available by the dealer on request of a retail buyer;
    3. may not use the term “rebate,” “cash back,” or a similar term in advertising the sale of a motor vehicle unless the rebate is expressed in a specific dollar amount and is in fact a rebate offered by the vehicle manufacturer or distributor directly to the retail buyer of the vehicle;
    4. may not require a person, in order to receive the advertised credit terms, to pay a higher price for a motor vehicle and any related goods or services than the cash price the same person would have to pay to purchase the same vehicle and related goods or services;
    5. may not advertise a guaranteed trade-in allowance or range of allowances unless the guarantee is provided by the manufacturer or distributor;
    6. may not affix to a new motor vehicle a supplemental price sticker containing a price that represents the dealer’s asking price if the supplemental price sticker exceeds the manufacturer’s suggested retail price, unless the supplemental sticker
      1. clearly and conspicuously, in the largest print appearing on the sticker other than the print size used for the dealer’s name, discloses that the supplemental sticker price is the dealer’s asking price, or words of similar meaning, and is not the manufacturer’s suggested retail price;
      2. clearly and conspicuously discloses the manufacturer’s suggested retail price; and
      3. states, if the supplemental sticker price is greater than the sum of the manufacturer’s suggested retail price and the price of the items added by the dealer, the difference and describes it as additional dealer mark-up;
    7. may not advertise or otherwise represent, or knowingly allow to be advertised or represented on behalf of the dealer, that a down payment is not required in connection with the sale of a motor vehicle when a down payment is in fact required;
    8. may not advertise an offer for the sale, lease, or purchase of a motor vehicle that does not contain the name of the dealer;
    9. may not represent and sell as a new motor vehicle a demonstrator vehicle or a motor vehicle that is a used motor vehicle; in this paragraph, “demonstrator vehicle”
      1. means a motor vehicle
        1. that has been assigned by a dealer for use by the dealership as an executive vehicle for promotional purposes, including being driven in the community;
        2. that has not been licensed by a retail buyer; and
        3. the title of which has not been transferred to a retail buyer;
      2. does not include a motor vehicle that has only been driven to demonstrate the motor vehicle to a prospective buyer;
    10. may not advertise that the dealer finances any person or does not reject any person’s credit, or make similar claims;
    11. may not advertise or make a statement, declaration, or representation in an advertisement that cannot be substantiated in fact; the burden of proof of the factual basis for the statement, declaration, or representation is on the dealer.
  2. [Repealed, § 9 ch 171 SLA 2004.]

History. (§ 9 ch 79 SLA 2002; am §§ 3, 9 ch 171 SLA 2004; am § 5 ch 50 SLA 2012)

Effect of amendments. —

The 2012 amendment effective August 27, 2012, in (a), deleted (a)(1) and (a)(4), and redesignated the remaining paragraphs; in (a)(2), substituted “unless the vehicle identification number” for “without identifying the vehicle by either its vehicle identification number” and added “is disclosed in the advertisement or made available by the dealer on request of a retail buyer” following “license number.”

Notes to Decisions

Cited in

Neese v. State, 218 P.3d 983 (Alaska 2009).

Sec. 45.25.465. Sales of used motor vehicles; required disclosures.

  1. Before the sale of a used motor vehicle, a motor vehicle dealer shall,
    1. when obtaining a used motor vehicle from an individual consumer, make a reasonable inquiry of the seller into the condition of the vehicle, including the accident and repair history of the vehicle; the information shall be recorded in writing and signed by the seller; the dealer shall provide this information to a prospective purchaser of the vehicle;
    2. when a motor vehicle dealer obtains a used motor vehicle from another motor vehicle dealer, a wholesaler, or an auction, disclose to a prospective purchaser of the vehicle that the vehicle was purchased from another dealer, a wholesaler, or an auction.
  2. Nothing in this section creates an express warranty by the dealer.
  3. [Repealed, § 1 ch 56 SLA 2008.]

History. (§ 9 ch 79 SLA 2002; am § 4 ch 171 SLA 2004; am § 1 ch 56 SLA 2008; am § 6 ch 50 SLA 2012)

Effect of amendments. —

The 2012 amendment, effective August 27, 2012, in (a)(1) substituted “signed by the seller” for “verified by the seller”.

Editor’s notes. —

Under § 2, ch. 56, SLA 2008, the 2008 repeal of (c) of this section, which has the effect of eliminating certain required disclosures about a used motor vehicle, applies retroactively to sales of those vehicles that occurred on or after October 24, 2004, subject to conditions otherwise specified in that section. See § 2, ch. 56, SLA 2008, in the 2008 Temporary and Special Acts.

Notes to Decisions

Class action. —

Consumers argued that a consent judgment impaired their interests under this section. Nevertheless, the superior court properly denied the consumers’ motion to intervene in the consent judgment proceeding against car dealerships because the consumers had opted out so they could still argue their position in their private class action. Neese v. State, 218 P.3d 983 (Alaska), modified, — P.3d — (Alaska 2009).

Cited in

Neese v. Lithia Chrysler Jeep of Anchorage, Inc., 210 P.3d 1213 (Alaska 2009).

Sec. 45.25.470. Sales of vehicles manufactured for sale in a foreign country.

Before sale, a motor vehicle dealer shall disclose in writing whether a motor vehicle was originally manufactured for sale in Canada or another foreign country.

History. (§ 9 ch 79 SLA 2002)

Notes to Decisions

Cited in

Neese v. Lithia Chrysler Jeep of Anchorage, Inc., 210 P.3d 1213 (Alaska 2009).

Sec. 45.25.480. Identification number plates.

A motor vehicle dealer may not knowingly purchase or sell a vehicle that has an altered or removed vehicle identification number plate, or alter or remove a vehicle identification number plate.

History. (§ 9 ch 79 SLA 2002)

Sec. 45.25.490. Required documentation.

A motor vehicle dealer may not enter into a contract to sell a motor vehicle unless the motor vehicle dealer holds a manufacturer’s statement of origin, a title, or another properly executed document reasonably necessary to obtain the statement of origin or title for transfer of the vehicle to the buyer.

History. (§ 9 ch 79 SLA 2002; am § 7 ch 50 SLA 2012)

Effect of amendments. —

The 2012 amendment, effective August 27, 2012, substituted “enter into a contract to sell a motor vehicle” for “sell or offer to sell a motor vehicle”.

Editor’s notes. —

Section 13, ch. 50, SLA 2012 provides that the 2012 amendments to this section apply “to motor vehicle contracts entered into on or after August 27, 2012.”

Sec. 45.25.500. Trade-ins.

A motor vehicle dealer may not transfer title to a trade-in vehicle or perform any repairs or reconditioning on a trade-in vehicle before the completion of the sales transaction for which the vehicle is a trade-in.

History. (§ 9 ch 79 SLA 2002)

Sec. 45.25.510. Disclosure of damages.

  1. Before entering into a new motor vehicle sales contract, a new motor vehicle dealer shall disclose in writing to a buyer of the new motor vehicle any known damage and repair to the new motor vehicle if the damage exceeds five percent of the manufacturer’s suggested retail price as calculated at the dealer’s authorized warranty rate for labor and parts, or $1,000, whichever amount is greater. A new motor vehicle dealer is not required to disclose to a buyer that glass, tires, bumpers, or cosmetic parts of a new motor vehicle were damaged at any time if the damaged item has been replaced with original or comparable equipment. A replaced part is not part of the cumulative damage required to be disclosed under this subsection.
  2. If disclosure is not required under this section, a buyer may not revoke or rescind a sales contract due to the fact that the new motor vehicle was damaged and repaired before completion of the sale.
  3. In this section,
    1. “cosmetic parts” means parts that are attached by and can be replaced in total through the use of screws, bolts, or other fasteners without the use of welding or thermal cutting and includes windshields, bumpers, hoods, or trim panels;
    2. “manufacturer’s suggested retail price” means the retail price of the new motor vehicle suggested by the manufacturer and includes the retail delivered price suggested by the manufacturer for each accessory or item of optional equipment physically attached to the new motor vehicle at the time of delivery to the new motor vehicle dealer that is not included within the retail price suggested by the manufacturer for the new motor vehicle.

History. (§ 9 ch 79 SLA 2002; am § 5 ch 171 SLA 2004)

Sec. 45.25.520. Form of disclosures.

Except as provided in AS 45.25.460(a)(6)(A) , if a disclosure is required by this chapter with respect to a motor vehicle advertisement, the disclosure must be made in a clear and conspicuous manner.

History. (§ 9 ch 79 SLA 2002; am § 8 ch 50 SLA 2012)

Effect of amendments. —

The 2012 amendment effective August 27, 2012, substituted “AS 45.25.460(a)(6)(A) ” for “AS 45.25.460(a)(8)(A).”

Sec. 45.25.530. Disclosure regarding receipt of commissions.

If a motor vehicle dealer’s service operations employees receive a commission for the amount of work they perform, the motor vehicle dealer shall post a conspicuous sign that is visible to service customers that the dealer’s service operations employees work on commission.

History. (§ 6 ch 171 SLA 2004)

Sec. 45.25.590. Definitions.

In AS 45.25.400 45.25.590 ,

  1. “advertise,” “advertised,” “advertising,” and “advertisement” include representations, whether made on or off store premises, made to persons in the print media, in the broadcast media, on the computer, in a brochure, in a flyer, by direct mail, by sign, or on a tag;
  2. “Monroney sticker” means the window sticker required by 15 U.S.C. 1231 — 1233 (Automobile Information Disclosure Act);
  3. “motor vehicle,” notwithstanding the definition of “motor vehicle” in AS 45.25.990 , means a vehicle, including a trailer, that is required to be registered under AS 28.10, but does not include a motorcycle;
  4. “new motor vehicle,” notwithstanding the definition of “new motor vehicle” in AS 45.25.990 , means a motor vehicle that has not been titled to anyone and still retains the original manufacturer’s certificate of origin.

History. (§ 9 ch 79 SLA 2002)

Article 5. Sales and Service Contracts.

Sec. 45.25.600. Title transfer.

A motor vehicle dealer may not transfer the title for a motor vehicle to a buyer before all of the sale documents, including any finance contract arranged by the seller, are complete and executed in final form by all parties to the sale.

History. (§ 9 ch 79 SLA 2002)

Sec. 45.25.610. Sales contracts.

  1. A motor vehicle sales contract must be in writing, signed by both the seller and buyer, and completed as to all essential provisions before the signing of the contract by the buyer and before delivery of the vehicle to the buyer.
  2. [Repealed, § 9 ch 171 SLA 2004.]
  3. If a motor vehicle dealer arranges financing for a buyer, the motor vehicle dealer may deliver the motor vehicle to the buyer before final approval by the financing entity if
    1. the buyer and seller sign an agreement separate from the motor vehicle installment contract on an 8 1/2 x 11 inch sheet of paper that clearly and conspicuously informs the buyer that final financing arrangements have not yet been approved and that clearly sets out the amount that will be financed, the annual percentage rate of the finance charge, the amount of the finance charge, the number and frequency of payments, and the amount of each payment;
    2. the separate agreement clearly and conspicuously informs the buyer that accepting delivery of the vehicle before final financing approval obligates the buyer to terms of the motor vehicle sales contract if the terms on the separate agreement are identical to the terms finally approved by the financing entity; and
    3. the separate agreement provides that the motor vehicle sales contract will be void if any of the terms contained in the separate agreement are changed by either the motor vehicle dealer or the financing institution as a condition of sale or final financing approval.
  4. If a buyer’s final financing is not approved and, as a result, the transaction is not completed, and if the motor vehicle dealer has delivered the motor vehicle to the buyer, the buyer shall deliver the motor vehicle to the motor vehicle dealer, the motor vehicle dealer shall return the buyer’s entire down payment less any amount owed to the motor vehicle dealer under (e) and (f) of this section, and the buyer’s trade-in, if any, shall be returned to the buyer in the same condition and with not more than 100 miles accumulated on the odometer from when the trade-in motor vehicle was delivered to the motor vehicle dealer.
  5. If a buyer’s final financing is not approved and the buyer has made an intentional misrepresentation in a credit application or other financial statement provided by the buyer to the motor vehicle dealer or to a financing institution, the buyer shall reimburse the motor vehicle dealer for the buyer’s use of the motor vehicle that exceeds 100 miles over the odometer reading on the motor vehicle on the date of the initial delivery, at a rate that is the greater of
    1. the business use mileage rate that is applied by the federal Internal Revenue Service at the time the motor vehicle is returned to the motor vehicle dealer; or
    2. $.45 a mile.
  6. If a buyer’s financing is not approved and the buyer has made an intentional misrepresentation as described in (e) of this section, the buyer is responsible for damage to the motor vehicle that occurred while the motor vehicle was in the buyer’s possession and for parking tickets, towing fees, storage fees, impound fees, and other similar charges incurred by the buyer for the motor vehicle while the motor vehicle was in the buyer’s possession.
  7. In this section, “sales contract” includes an installment sales contract, a short-term sales contract, and a single-payment contract.

History. (§ 9 ch 79 SLA 2002; am §§ 7 — 9 ch 171 SLA 2004; am §§ 9 — 11 ch 50 SLA 2012)

Revisor’s notes. —

Subsections (e) and (f) were enacted as (f) and (g), respectively. Relettered in 2012, at which time subsection (e) was relettered as (g) and internal references in subsections (d) and (f) were conformed.

Effect of amendments. —

The 2012 amendment, effective August 27, 2012, in (c)(3), deleted “separate agreement, the” following “agreement provides that the” and “and any and all other conditions of the purchase” following “motor vehicle sales contract”; in (d), added “and if the motor vehicle dealer has delivered the motor vehicle to the buyer, the buyer shall deliver the motor vehicle to the motor vehicle dealer,” following “is not completed”, “less any amount owed to the motor vehicle dealer under (f) and (g) (now (e) and (f)) of this section,” following “entire down payment” , and added “trade-in” following “odometer from when the”; added (f) (now (e)) and (g) (now (f)).

Editor’s notes. —

Section 13, ch. 50, SLA 2012 provides that the 2012 amendments to this section apply “to a motor vehicle sales contract or an agreement that is entered into on or after August 27, 2012.”

Sec. 45.25.620. Service contracts.

  1. A motor vehicle service contract must be in writing and contain all essential provisions regarding the administration of the contract.
  2. If a service contract is included in a motor vehicle sale, the seller shall, before delivery of the motor vehicle, give to the buyer a written statement with all pertinent blank spaces filled in that shall be signed by both the buyer and seller and that clearly and conspicuously
    1. explains the difference between a service contract and a warranty;
    2. discloses the maker of or obligor on the service contract;
    3. describes the relationship between the maker and the seller of the service contract;
    4. for a vehicle that is a used vehicle, notifies the buyer that the seller may not disclaim implied warranties if the seller is the maker or obligor of the service contract; and
    5. includes all other disclosures required by law.
  3. A motor vehicle dealer may not disclaim or limit implied warranties for a motor vehicle for which the motor vehicle dealer is a maker of a service contract sold for that motor vehicle. However, a motor vehicle dealer may disclaim or limit implied warranties as otherwise allowed by law, regardless of the make or model of the motor vehicle, if the motor vehicle dealer is merely the seller, not the maker, of the service contract and does not otherwise extend any written warranties on the motor vehicle that is purchased.
  4. In this section, “maker” means the person that makes, frames, and executes a service contract and assumes any obligation due to the buyer, but does not include a motor vehicle dealer who merely sells the service contract as the agent of a service contract company doing business in this state.

History. (§ 9 ch 79 SLA 2002; am § 12 ch 50 SLA 2012)

Effect of amendments. —

The 2012 amendment, effective August 27, 2012, in (a), deleted the second sentence, which addressed the difference between an application for a service contract and a service contract.

Editor’s notes. —

Section 13, ch. 50, SLA 2012 provides that the 2012 amendments to this section apply “to a motor vehicle service contract entered into on or after August 27, 2012.”

Sec. 45.25.630. Discharged amounts in motor vehicle leases.

  1. Notwithstanding another provision of law to the contrary, if the amount to be paid by a lessee under a motor vehicle lease includes a discharged amount, the inclusion of the discharged amount in the amount to be paid under the lease is not a loan of the discharged amount and is not subject to any law that regulates the disclosure of interest, the charging of interest, the amount of interest rates, or the lending of money.
  2. In this section, “discharged amount” means the amount, if any, that the lessor agrees to pay to discharge an outstanding obligation of the lessee under an existing motor vehicle agreement, loan, installment sales contract, or lease.

History. (§ 4 ch 67 SLA 2006)

Effective dates. —

Section 4, ch. 67, SLA 2006, which enacted this section, took effect on September 13, 2006.

Article 6. General Provisions.

Sec. 45.25.900. Conflict with other law.

If a provision of this chapter conflicts with another provision of this title, this chapter controls.

History. (§ 9 ch 79 SLA 2002)

Sec. 45.25.910. Remedial purpose.

The provisions of this chapter are remedial.

History. (§ 9 ch 79 SLA 2002)

Sec. 45.25.990. Definitions.

In this chapter,

  1. “dealer” means a new motor vehicle dealer or used motor vehicle dealer;
  2. “dealership” means the business entity that is operated by a motor vehicle dealer;
  3. “distributor” means a person or entity who sells or distributes new or used motor vehicles to motor vehicle dealers or who maintains or sends distributor representatives within or to this state to sell or distribute new or used motor vehicles to motor vehicle dealers in this state; in this paragraph, “distributor representative” means a representative employed by a distributor branch, distributor, or wholesaler who sells or distributes new or used motor vehicles to franchised motor vehicle dealers in this state;
  4. “distributor branch” means a branch office maintained by a distributor or wholesaler who sells or distributes new or used motor vehicles to franchised motor vehicle dealers in this state;
  5. “franchise” means a written arrangement for a definite or indefinite period in which a manufacturer, distributor, or motor vehicle wholesaler grants to a motor vehicle dealer a license, sales and service agreement, or contract of any kind to use a trade name, service mark, or related characteristic, and in which there is a community of interest in the wholesale or retail marketing of related motor vehicles or services;
  6. “franchised” means having a franchise;
  7. “fraud” includes a promise or representation not made honestly or in good faith, and an intentional failure to disclose a material fact;
  8. “good faith” means honesty in fact and the observation of reasonable commercial standards of fair dealing in the trade;
  9. “lease,” except in AS 45.25.150 , means a contract by which a person owning a motor vehicle grants to another person the right to possess, use, and enjoy the motor vehicle for a specified period of time in exchange for periodic payment of a stipulated price and in which the use of the vehicle is granted for a period of 12 or more months;
  10. “manufacturer” means a person or the person’s subsidiary who manufacturers, imports, distributes, or assembles new motor vehicles and includes an administrator, a distributor, a distributor branch, and a factory branch; in this paragraph, “factory branch” means a branch office maintained by a manufacturer for directing and supervising the representatives of the manufacturer;
  11. “manufacturer representative” means any employee or agent of a manufacturer who engages in the business of contacting a manufacturer’s respective franchised dealers for the purpose of making or promoting the sale of the manufacturer’s vehicles, parts, accessories, or services;
  12. “motor vehicle” means a motor vehicle that is required to be registered under AS 28.10, but does not include a motor home, a recreational vehicle, or a motorcycle; in this paragraph,
    1. “all-terrain vehicle” has the meaning given in AS 45.27.390 ;
    2. “recreational vehicle” includes an all-terrain vehicle and a snow machine;
    3. “snow machine” has the meaning given in AS 45.27.390 ;
  13. “motor vehicle dealer” has the meaning given in AS 08.66.350 , except that, in this paragraph, notwithstanding the definition of “motor vehicle” given in AS 08.66.350 , “motor vehicle” has the meaning given in this section;
  14. [Repealed, § 61 ch 22 SLA 2015.]
  15. “new motor vehicle” means a motor vehicle that has not been previously sold to and registered to a person except a distributor, wholesaler, or motor vehicle dealer for resale;
  16. “new motor vehicle dealer” means a motor vehicle dealer for new motor vehicles or for new and used motor vehicles;
  17. “sale” means the issuance, transfer, agreement for transfer, exchange, gift, pledge, hypothecation, or mortgage in any form, whether by transfer in trust or otherwise, of a motor vehicle, an interest in a motor vehicle, or a related franchise;
  18. “schedule of compensation” means a schedule of compensation established under AS 45.25.210 ;
  19. “service contract” means an optional agreement that is separate from a contract for the sale of a motor vehicle and that covers certain repair or maintenance functions beyond coverage provided by a warranty;
  20. “terminate” includes
    1. canceling or not renewing;
    2. a manufacturer discontinuing the sale and distribution of a new motor vehicle line make covered by a franchise;
  21. “used motor vehicle” means a motor vehicle that has been previously sold to and registered to a person other than a distributor, wholesaler, or motor vehicle dealer;
  22. “used motor vehicle dealer” means a motor vehicle dealer for used motor vehicles;
  23. “warranty work”
    1. means repairs that are covered under a manufacturer’s warranty or a recall;
    2. means work that the manufacturer in good will directs be performed and reimbursed by the manufacturer but that is not covered by the manufacturer’s warranty or a recall;
    3. does not mean work under a separate service contract.

History. (§ 9 ch 79 SLA 2002; am § 1 ch 28 SLA 2009; am § 61 ch 22 SLA 2015; am §§ 14, 15 ch 50 SLA 2018)

Revisor's notes. —

Paragraph (18) was enacted as (22); renumbered in 2018, at which time other paragraphs were renumbered to maintain alphabetical consistency.

Effect of amendments. —

The 2009 amendment, effective May 26, 2009, in (12), added “in this paragraph” at the end of the introductory language; added (12)(A) through (12)(C).

The 2015 amendment, effective May 15, 2015, repealed (14).

The 2018 amendment, effective September 30, 2018, rewrote (19); added (22) [now (18)] and (23).

Chapter 27. Marine Products and Motorized Recreational Products.

Effective dates. —

Section 7, ch. 28, SLA 2009 makes this chapter effective May 26, 2009, in accordance with AS 01.10.070(c) .

Editor’s notes. —

Section 6, ch. 28, SLA 2009, provides that this chapter does not apply to a dealership agreement that is entered into before May 26, 2009.

Article 1. Agreement Practices of Product Manufacturers.

Sec. 45.27.010. Consent to transfer of agreement.

A manufacturer may not unreasonably withhold consent to the sale or other transfer of a dealership agreement by an authorized dealer to a transferee if the transferee

  1. meets the criteria generally applied by the manufacturer when approving new authorized dealers; and
  2. agrees to be bound by all the terms and conditions of the standard form of the dealership agreement.

History. (§ 2 ch 28 SLA 2009)

Sec. 45.27.020. Cancellation or nonrenewal of agreement.

  1. A manufacturer may not cancel or decline to renew a dealership agreement with an authorized dealer unless
    1. the manufacturer has
      1. satisfied the notice requirements of this chapter; and
      2. shown that there is good cause for the cancellation or nonrenewal of the dealership agreement, and, if the reasons underlying the good cause can be corrected by the authorized dealer, the authorized dealer has failed for 60 days after delivery of the notice required by AS 45.27.030 to make the corrections; the circumstances identified under AS 45.27.030(a)(2) , for which a 15-day notice of cancellation or nonrenewal is required, do not qualify as reasons for which correction is allowed under this paragraph; or
    2. the authorized dealer has engaged in fraud
      1. against consumers or the manufacturer; or
      2. in the operation of the authorized dealer’s dealership.
  2. Under (a)(1)(B) of this section, an authorized dealer may not prevent a cancellation or nonrenewal of a dealership agreement more than two times by making corrections.
  3. Notwithstanding (a)(1) of this section, a manufacturer may not cancel or decline to renew a dealership agreement with an authorized dealer because of the death or incapacity of an owner if the owner is not listed in the agreement as one on whose expertise and abilities the manufacturer relied in the granting of the agreement.
  4. In this section, “good cause” includes circumstances in which the authorized dealer fails to comply with or observe a material provision of the dealership agreement with the authorized dealer. For the purpose of determining good cause under this subsection, reasonable sales and service performance criteria and capital and facility requirements may be considered material provisions only if the criteria or requirements were communicated in writing to the authorized dealer within a reasonable period of not less than six months before the effective date of the cancellation or nonrenewal, to afford the authorized dealer a reasonable opportunity to comply with the criteria or requirements.

History. (§ 2 ch 28 SLA 2009)

Sec. 45.27.030. Notice of cancellation or nonrenewal.

  1. A manufacturer shall furnish a notice of cancellation or nonrenewal of a dealership agreement with an authorized dealer to an authorized dealer at least
    1. 90 days before the effective date of a cancellation or nonrenewal, except as provided under (2) of this subsection;
    2. 15 days before the effective date of a cancellation or nonrenewal when the authorized dealer
      1. is insolvent or is the subject of a bankruptcy or receivership proceeding;
      2. is convicted of a felony involving moral turpitude or fraud under the law of this state, another state, the federal government, a territory of the United States, or the District of Columbia;
      3. has violated a term of the dealership agreement with the manufacturer, the violation of which the manufacturer and the authorized dealer have agreed in the dealership agreement constitutes a basis for cancellation or nonrenewal.
  2. Notice required under (a) of this section must be in writing, shall be sent by certified mail or personally delivered to the authorized dealer, and must contain
    1. a statement of intention to cancel or not renew the dealership agreement;
    2. a statement of the reasons for the cancellation or nonrenewal; and
    3. the date on which the cancellation or nonrenewal takes effect.
  3. In this section, “mail” means registered or certified mail, return receipt requested.

History. (§ 2 ch 28 SLA 2009)

Sec. 45.27.040. Threat of cancellation or nonrenewal.

  1. A manufacturer or manufacturer’s representative may not coerce or attempt to coerce an authorized dealer to enter into a dealership agreement with the manufacturer or a subsidiary of the manufacturer, or to perform any other act unfair to the authorized dealer, by threatening to terminate a dealership agreement between the manufacturer or subsidiary of the manufacturer and the authorized dealer.
  2. This section does not prohibit a voluntary agreement between a manufacturer and an authorized dealer to settle legitimate disputes.
  3. In this section, “manufacturer’s representative” means an employee or agent of a manufacturer who engages in the business of contacting a manufacturer’s authorized dealer for the purpose of making or promoting the sale of the manufacturer’s products or product parts.

History. (§ 2 ch 28 SLA 2009)

Sec. 45.27.050. Repurchase obligations on cancellation or nonrenewal.

  1. On the cancellation or nonrenewal of a dealership agreement by a manufacturer without satisfying the requirements under AS 45.27.020 , the manufacturer shall repurchase from the authorized dealer’s inventory
    1. each new and unused product of the manufacturer that is a current product model, or the product model from the previous year; and
    2. each product part that
      1. was purchased from the manufacturer by the authorized dealer;
      2. is listed in the manufacturer’s parts price books in the previous two years; and
      3. has not been damaged or substantially altered to the prejudice of the manufacturer while in the possession of the authorized dealer.
  2. Within 90 days after the effective date of the cancellation or nonrenewal, the authorized dealer shall return the property required by (a) of this section to be repurchased to the manufacturer at the manufacturer’s expense. The manufacturer shall pay the compensation for the property within 60 days after the tender of inventory and other items if the authorized dealer has clear title to the property and is in a position to convey that title to the manufacturer. If the property is subject to a security interest, the manufacturer may make the payments jointly to the authorized dealer and the holder of the security interest, and the manufacturer may offset the payment.
  3. The amount of a repurchase required by (a) of this section must be based on the authorized dealer’s landed cost, subject to adjustments to landed costs for quarterly or annual purchase rebates and credits given to the authorized dealer on the products or product parts.

History. (§ 2 ch 28 SLA 2009)

Article 2. Product Warranties.

Sec. 45.27.100. Warranty provided.

A manufacturer shall provide, through the authorized dealer, to the product’s ultimate purchaser from an authorized dealer the manufacturer’s standard warranty, if any, that is in effect at the time of delivery of the product to the authorized dealer.

History. (§ 2 ch 28 SLA 2009)

Sec. 45.27.110. Nonconforming products.

  1. A manufacturer of a nonconforming product shall, during the original warranty period, pay an authorized dealer to complete factory-recommended warranty repairs, solutions, and procedures to cure factory warranty problems with a nonconforming product. The manufacturer shall make the payment in accordance with the standard warranty service claim procedures and methods of the industry and with AS 45.27.100 45.27.220 .
  2. If a part that is necessary to repair a nonconforming product of a nonconformity that is covered under a manufacturer’s warranty is not in an authorized dealer’s inventory when the nonconforming product is brought to the authorized dealer for repair, the manufacturer of the product shall provide the authorized dealer with the part. The manufacturer shall provide the part as soon as possible and may not charge for freight or handling. This subsection applies to a manufacturer whose products are sold in the state through an authorized dealer.
  3. The manufacturer of a nonconforming product shall pay the cost for transporting a replacement for the nonconforming product from the manufacturer to the authorized dealer who sold the nonconforming product to the ultimate purchaser or the authorized dealer who is located nearest to the ultimate purchaser, whichever of the two authorized dealers the ultimate purchaser chooses. The manufacturer is not required to pay the transportation cost from the authorized dealer to the ultimate purchaser or from the ultimate purchaser to the authorized dealer.
  4. In this section, “nonconforming product” means a product that has a nonconformity.

History. (§ 2 ch 28 SLA 2009)

Sec. 45.27.120. Authorized dealer warranty representations.

An authorized dealer may not make a representation about the warranty that is not made by the manufacturer in the warranty. An authorized dealer shall deliver the manuals on the operation and maintenance of a product to an ultimate purchaser and make the manufacturer’s warranty known to the ultimate purchaser, including all disclaimers and limitations.

History. (§ 2 ch 28 SLA 2009)

Sec. 45.27.130. Warranty service and claims.

  1. An authorized dealer shall provide warranty service in accordance with the manufacturer’s applicable warranty on all of the manufacturer’s products sold by the authorized dealer.
  2. An authorized dealer shall make all claims for warranty reimbursement in the manner established by the manufacturer.

History. (§ 2 ch 28 SLA 2009)

Sec. 45.27.140. Warranty restrictions.

A manufacturer may not, by dealership agreement, by restrictions on reimbursement, or by another method, restrict the nature or extent of product parts provided or labor performed by an authorized dealer if the restriction impairs the authorized dealer’s ability to satisfy a warranty created by the manufacturer in accordance with generally accepted standards.

History. (§ 2 ch 28 SLA 2009)

Sec. 45.27.150. Basis for reimbursements.

  1. A manufacturer shall use the criteria established in this section to reimburse an authorized dealer for all approved warranty service work performed by the authorized dealer.
  2. If the technician performing the warranty service work meets the certification standards in the dealership agreement, a manufacturer shall pay to a servicing authorized dealer warranty work labor rates that
    1. are not less than the highest of the following:
      1. the rate the authorized dealer customarily charges to a customer for nonwarranty service work;
      2. the manufacturer’s printed flat rate; or
      3. the rate established by a flat rate manual for dealers, if the manual is produced for dealers by a nationally respected industry consultant; and
    2. include time for clean-up, preparation, diagnosis, disassembly, repair, assembly, testing, and final cleaning as needed to provide a quality result and customer satisfaction.
  3. In addition to the payment under (b) of this section, the manufacturer shall reimburse an authorized dealer a minimum of one hour at the authorized dealer’s shop standard labor rate for the administration of each warranty claim.
  4. A manufacturer shall reimburse the authorized dealer for product parts in the authorized dealer’s inventory at the current manufacturer’s full suggested retail price.

History. (§ 2 ch 28 SLA 2009)

Sec. 45.27.160. Timely reimbursement for claims.

A manufacturer shall pay a properly submitted warranty claim of an authorized dealer within 30 days after receiving the claim from an authorized dealer. Unless a manufacturer issues a written notice of disapproval under AS 45.27.170 within the 30 days, if a manufacturer fails to pay a claim within 30 days after receipt, the failure is considered an acceptance of the claim as submitted, and the manufacturer shall pay the authorized dealer interest at the rate of 1.5 percent a month on the claim.

History. (§ 2 ch 28 SLA 2009)

Sec. 45.27.170. Warranty claim disapproval.

If a manufacturer does not approve a claim submitted under AS 45.27.160 , the manufacturer shall issue a written notice of disapproval to the authorized dealer within 30 days after the manufacturer receives the claim. The notice must contain the specific reasons for the disapproval.

History. (§ 2 ch 28 SLA 2009)

Sec. 45.27.180. Repairs required.

If a product does not conform to a warranty that is applicable to it and the ultimate purchaser of the product reports the nonconformity to the manufacturer of the product or to the manufacturer’s authorized dealer during the term of the warranty, the manufacturer or authorized dealer shall make the necessary repairs to conform the product to the warranty.

History. (§ 2 ch 28 SLA 2009)

Sec. 45.27.190. Replacement or refund.

  1. If, during the term of a warranty or within one year after the date of the delivery of the product to the ultimate purchaser, whichever period of time terminates first, the manufacturer or authorized dealer is unable to conform a product to an applicable warranty after a reasonable number of attempts, the manufacturer shall accept the return of the nonconforming product, and, at the ultimate purchaser’s option, shall replace the nonconforming product with a new comparable product or refund the full purchase price to the owner after deducting a reasonable amount of money for the ultimate purchaser’s use of the product from the date the product was delivered to the ultimate purchaser.
  2. The reasonable amount of money deducted under (a) of this section may not exceed an amount that is equal to the sum of
    1. the amount of money that reflects the depreciation in value of the product for the period during which the product was available for use by the ultimate purchaser, as calculated by a straight line depreciation method over seven years; and
    2. an amount of money that is equal to the depreciation in value of the product that was caused by
      1. neglect or abuse by the ultimate purchaser; or
      2. body damage that was not caused by the nonconformity.
  3. The manufacturer shall make the refund required by this section
    1. to the lienholder of record for the product, if any, to the extent of the lienholder’s interest, and, if there is a balance after satisfying the lienholder’s interest, to the ultimate purchaser; or
    2. entirely to the ultimate purchaser, if there is no lienholder of record for the product.
  4. In this section,
    1. “costs” include original registration fees, transportation fees, authorized dealer’s preparation fees, and the cost of options installed by the authorized dealer;
    2. “full purchase price” means the total price paid for a product by the ultimate purchaser, including any costs added to the retail price.

History. (§ 2 ch 28 SLA 2009)

Sec. 45.27.200. Notice by ultimate purchaser.

  1. To claim a refund or replacement under AS 45.27.190 , an ultimate purchaser shall give written notice by certified mail to the manufacturer and its authorized dealer before 60 days have elapsed after the termination of whichever of the following periods of time terminates first:
    1. the term of the warranty; or
    2. one year after the date of delivery of the product to the ultimate purchaser.
  2. The notice required by (a) of this section must
    1. state that the product has a nonconformity;
    2. provide a reasonable description of the nonconformity;
    3. state that the manufacturer or authorized dealer has made a reasonable number of attempts to conform the product to the warranty; and
    4. state that the ultimate purchaser demands that a refund or a replacement of the product be delivered on or before the 60th day after the mailing date of the written notice.
  3. Within 30 days after receiving the notice required by this section, the manufacturer may make a final attempt to conform the product before the manufacturer is required to make a refund or replacement under AS 45.27.190 .

History. (§ 2 ch 28 SLA 2009)

Sec. 45.27.210. Exceptions.

An ultimate purchaser may not receive a refund for or replacement of a product under AS 45.27.190 45.27.220 if the manufacturer shows that the problem or condition because of which the ultimate purchaser is claiming a refund or a replacement

  1. is not a nonconformity; or
  2. is a nonconformity that resulted from
    1. alteration of the product by the ultimate purchaser, or by a person who is not the authorized dealer or otherwise authorized by the manufacturer or distributor to make the alteration; or
    2. abuse or neglect by the ultimate purchaser or another person other than the authorized dealer.

History. (§ 2 ch 28 SLA 2009)

Sec. 45.27.220. Presumption.

A rebuttable presumption that a reasonable number of attempts have been made to conform a product to an applicable warranty is established if

  1. the nonconformity continues to exist even though the same nonconformity has been subject to repair three or more times by the manufacturer or authorized dealer during the term of the warranty or the one-year period after the date of delivery of the product to the ultimate purchaser, whichever period of time terminates first; or
  2. the product is out of service for repair for a total of 30 or more days on which the authorized dealer is open for business during the term of the warranty or during the one-year period after the date of delivery of the product to the ultimate purchaser, whichever period of time terminates first; a period of time during which repairs are not performed for reasons that are beyond the control of the manufacturer or authorized dealer is not included in satisfying the 30-day time period.

History. (§ 2 ch 28 SLA 2009)

Article 3. Miscellaneous Business Practices.

Sec. 45.27.250. Required posting.

  1. An authorized dealer shall post a notice of the authorized dealer’s retail labor rate in a place conspicuous to service customers. If the authorized dealer uses a factory-certified or factory-trained technician to perform warranty service work, the notice must also contain a statement that warranty service work completed by the authorized dealer is performed by a factory-certified or factory-trained technician.
  2. If an authorized dealer’s service operations employees receive a commission for the amount of work they perform, the authorized dealer shall post a conspicuous sign that is visible to service customers that the authorized dealer’s service operations employees work on commission.

History. (§ 2 ch 28 SLA 2009)

Sec. 45.27.260. Written estimates for repairs not covered by warranty.

  1. Before beginning repair work on a product for a customer, an authorized dealer shall provide to the customer a written estimate listing the specific parts, labor, and cost of the repairs.
  2. If additional repairs are determined to be necessary after the service employees begin repairing the product, the authorized dealer shall contact the customer and receive permission to do additional repairs not covered in the written estimate.
  3. An authorized dealer shall post in a conspicuous place for service customers to view all charges for diagnostics, storage, and other incidentals not associated with the actual repair of a product.

History. (§ 2 ch 28 SLA 2009)

Sec. 45.27.270. Content of factory recall notices.

A manufacturer shall include in a written factory recall notice to ultimate purchasers and authorized dealers the date by which the manufacturer expects that necessary parts and equipment will be available to the authorized dealer for the correction of the defect that is the subject of the recall.

History. (§ 2 ch 28 SLA 2009)

Sec. 45.27.280. Resale without disclosure prohibited.

A manufacturer may not resell in the state a product returned under AS 45.27.190 unless the manufacturer fully discloses to the prospective buyer before the resale is concluded the reason why the product was returned.

History. (§ 2 ch 28 SLA 2009)

Article 4. Miscellaneous Provisions.

Sec. 45.27.300. Other rights and remedies.

The provisions of this chapter do not limit other rights and remedies that may be available to the owner of a product under other provisions of law. This section does not create a new cause of action against an authorized dealer who sells or attempts to repair a product found to be nonconforming.

History. (§ 2 ch 28 SLA 2009)

Sec. 45.27.310. Applicability.

The provisions of this chapter apply to a dealership agreement if the dealership agreement is between a manufacturer and an authorized dealer in this state.

History. (§ 2 ch 28 SLA 2009)

Sec. 45.27.320. Jurisdiction; venue.

  1. This state has jurisdiction over a legal dispute between a manufacturer located in or outside this state and an authorized dealer located in this state, and the dispute is governed by, interpreted, and adjudicated under the law of this state.
  2. Venue for court action involving a dispute under (a) of this section is in the judicial district of this state in which the authorized dealer’s principal place of business is located.

History. (§ 2 ch 28 SLA 2009)

Cross references. —

For the effect of this section on Rule 3, Alaska Rules of Civil Procedure, relating to a dispute between a manufacturer and an authorized dealer, see § 5, ch. 28, SLA 2009, in the 2009 Temporary and Special Acts.

Sec. 45.27.330. Corporate affiliates.

  1. A manufacturer may not use a subsidiary corporation, affiliated corporation, partnership, association, or other person to do what the manufacturer is prohibited from doing under this chapter.
  2. The provisions of (a) of this section do not limit the right of a person to engage in reasonable and appropriate business practices consistent with an existing trade practice that is not prohibited by this chapter.

History. (§ 2 ch 28 SLA 2009)

Sec. 45.27.340. Unenforceable provisions.

If a provision in a dealership agreement violates this chapter, the provision is not enforceable.

History. (§ 2 ch 28 SLA 2009)

Article 5. General Provisions.

Sec. 45.27.390. Definitions.

In this chapter, unless the context indicates otherwise,

  1. “authorized dealer” means a person who has entered into a dealership agreement with a manufacturer;
  2. “boat” means a marine product that is not equipped with a motor;
  3. “dealership agreement” means an agreement between a person and a manufacturer of products for the person to engage in the retail sale and warranty repair of the manufacturer’s products in the state;
  4. “distributor” means a person who is authorized by a manufacturer to engage in the wholesale distribution of the manufacturer’s products in the state;
  5. “landed cost” means the sum of the price of the product and the transportation cost to the authorized dealer’s facility;
  6. “manufacturer” means a person who
    1. fabricates, manufactures, or assembles products; “manufacturer” includes a manufacturer branch and a manufacturer sales representative, but does not include a person who converts, modifies, or otherwise alters a product fabricated, manufactured, or assembled by another person; or
    2. is a distribution entity that is
      1. owned or controlled by a person described under (A) of this paragraph; and
      2. separate from a person described under (A) of this paragraph;
  7. “marine product” means a new watercraft, boat, or gasoline motor designed for recreational or commercial use on water; “marine product” includes an outboard gasoline motor or boat with an attached gasoline motor, but does not include a watercraft designed or adapted to be powered only by an occupant’s energy;
  8. “motorized recreational product” means an all-terrain vehicle, a marine gasoline motor, a boat, a boat package, a marine product, and a snow machine; in this paragraph,
    1. “all-terrain vehicle” means a vehicle with three or more low-pressure, flotation-type tires, as designed by the manufacturer or altered, to be used as an off-road recreational vehicle;
    2. “boat package” means a boat that is equipped and sold with a gasoline motor or another form of gasoline motorized propulsion;
    3. “snow machine” means a motorized vehicle with a gross vehicle weight under 1,300 pounds propelled by a track system designed to move a person over snow or ice, and includes a snowmobile;
  9. “nonconformity” means a defect or condition in a product that is caused by a manufacturer, distributor, or authorized dealer and that
    1. substantially decreases the dollar value of a product to the owner when compared to the dollar value of a similar product that does not have the defect or condition; or
    2. prevents a product from being operated or used or makes the product unsafe;
  10. “part” includes an accessory;
  11. “product” means a marine product or a motorized recreational product;
  12. “ultimate purchaser” means
    1. a purchaser, other than for resale, of a new product, if the new product is not subject to AS 28.10 or AS 28.39; or
    2. a person to whom ownership of a new product is transferred under AS 28.10 or AS 28.39;
  13. “warranty” means a written warranty provided by the manufacturer of a product.

History. (§ 2 ch 28 SLA 2009)

Sec. 45.27.395. Short title.

This chapter may be cited as the Alaska Marine Product and Motorized Recreational Product Act.

History. (§ 2 ch 28 SLA 2009)

Chapter 29. Secured Transactions.

Revisor’s notes. —

This chapter is based on the comprehensive revision of the Uniform Commercial Code’s Article 9 on secured transactions as recommended by the National Conference of Commissioners on Uniform State Laws in 1998.

Editor’s notes. —

Section 115(a), ch. 44, SLA 2009, provides that the amendments made by ch. 44, SLA 2009, apply “to a document of title that is issued or a bailment that arises on or after January 1, 2010” and do “not apply to a document of title that is issued or a bailment that arises before January 1, 2010, even if the document of title or bailment would be subject to [ch. 44, SLA 2009] if the document of title was issued or the bailment arose on or after January 1, 2010.” Section 115(b), ch. 44, SLA 2009 provides that ch. 44, SLA 2009, “does not apply to a right of action that has accrued before January 1, 2010.” Section 116, ch. 44, SLA 2009, provides that “A document of title issued or a bailment that arises before January 1, 2010, and the rights, obligations, and interests flowing from that document or bailment are governed by a statute amended or repealed by [ch. 44, SLA 2009] as if the amendment or repeal had not occurred and may be terminated, completed, consummated, or enforced under that statute.”

Notes to Decisions

Legislative intent. —

The legislature intended the utilization of the procedures in this chapter to protect the interests of parties such as the supplier of a contractor’s capital equipment, rather than resort to a contractor’s registration bond. Balboa Ins. Co. v. Senco Alaska, 567 P.2d 295 (Alaska 1977) (decided under former AS 45.09). (Superseded by statute.) See also Alaska Nat'l Ins. Co. v. Northwest Cedar Structures, Inc., 153 P.3d 336 (Alaska 2007).

Security interests in vessels. —

Alaska’s version of the U.C.C. applies to security interests in vessels. Fehir v. State, 739 P.2d 785 (Alaska Ct. App. 1987), rev'd, 755 P.2d 1107 (Alaska 1988) (decided under former AS 45.09).

Lease and sublease are security interests within the meaning of this chapter. Stanley v. Fabricators, 459 P.2d 467 (Alaska 1969) (decided under former AS 45.09).

Cited in

Newell v. National Bank, 646 P.2d 224 (Alaska 1982) (decided under former AS 45.09).

Collateral references. —

Sufficiency of notice of secured party’s proposed disposition of collateral. 35 Am. Jur. POF2d, pp. 517 — 588.

Sufficiency of notice of secured party’s proposed disposition of collateral. 35 Am. Jur. POF2d, pp. 517 — 588.

Coogan, Hogan, Vagts, McDonnell, Secured Transactions Under the UCC (Matthew Bender).

Effect of UCC Article 9 upon conflict, as to funds in debtor’s bank account, between secured creditor and bank claiming right of setoff, 3 ALR4th 998.

Applicability of Article 9 of Uniform Commercial Code to assignment of rights under real-estate sales contract, lease agreement, or mortgage as collateral for separate transaction, 76 ALR4th 765.

Equitable estoppel of secured party’s right to assert prior perfected security interest against other creditor or subsequent purchaser under Article 9 of UCC, 9 ALR5th 708.

Article 1. General Provisions.

Sec. 45.29.101. Short title.

This chapter may be cited as Uniform Commercial Code — Secured Transactions.

History. (§ 1 ch 113 SLA 2000)

Collateral references. —

67 Am. Jur. 2d, Sales, § 35.

Construction and effect of UCC Art. 9, dealing with secured transactions, sales of accounts, contract rights, and chattel paper, 30 ALR3d 9; 67 ALR3d 308; 69 ALR3d 1162; 76 ALR3d 11; 99 ALR3d 807; 99 ALR3d 1080; 100 ALR3d 10; 100 ALR3d 940; 7 ALR4th 308; 11 ALR4th 241; 90 ALR4th 859; 25 ALR5th 696.

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

Effectiveness of original financing statement under UCC Art. 9 after change of debtor’s name, identity, or business structure, 99 ALR3d 1194.

Sec. 45.29.102. Definitions.

  1. In this chapter,
    1. “accession” means goods that are physically united with other goods in a manner so that the identity of the original goods is not lost;
    2. “account,” except as used in “account for,”
      1. means a right to payment of a monetary obligation, whether or not earned by performance,
        1. for property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of;
        2. for services rendered or to be rendered;
        3. for a policy of insurance issued or to be issued;
        4. for a secondary obligation incurred or to be incurred;
        5. for energy provided or to be provided;
        6. for the use or hire of a vessel under a charter or other contract;
        7. arising out of the use of a credit or charge card or information contained on or for use with the card; or
        8. as winnings in a lottery or other game of chance operated or sponsored by a state, a governmental unit of a state, or a person licensed or authorized to operate the game by a state or a governmental unit of a state;
      2. includes health care insurance receivables;
      3. does not include rights to payment evidenced by chattel paper or by an instrument, commercial tort claims, deposit accounts, investment property, letter-of-credit rights or letters of credit, or rights to payment for money or funds advanced or sold, other than rights arising out of the use of a credit or charge card or information contained on or for use with the card;
    3. “account debtor” means a person obligated on an account, chattel paper, or general intangible, except that “account debtor” does not include persons obligated to pay a negotiable instrument even if the instrument constitutes part of chattel paper;
    4. “accounting,” except as used in “accounting for,” means a record
      1. authenticated by a secured party;
      2. indicating the aggregate unpaid secured obligations as of a date not more than 35 days earlier or 35 days later than the date of the record; and
      3. identifying the components of the obligations in reasonable detail;
    5. “agricultural lien” means an interest, other than a security interest, in farm products
      1. that secures payment or performance of an obligation for
        1. goods or services furnished in connection with a debtor’s farming operation; or
        2. rent on real property leased by a debtor in connection with the debtor’s farming operation;
      2. that is created by statute in favor of a person who
        1. in the ordinary course of its business, furnished goods or services to a debtor in connection with the debtor’s farming operation; or
        2. leased real property to a debtor in connection with the debtor’s farming operation; and
      3. whose effectiveness does not depend on the person’s possession of the personal property;
    6. “applicant” has the meaning given in AS 45.05.102(a) ;
    7. “as-extracted collateral” means
      1. oil, gas, or other minerals that are subject to a security interest that
        1. is created by a debtor having an interest in the minerals before extraction; and
        2. attaches to the minerals as extracted; or
      2. accounts arising out of the sale at the wellhead or minehead of oil, gas, or other minerals in which the debtor had an interest before extraction;
    8. “authenticate” means
      1. to sign; or
      2. with present intent to adopt or accept a record, to attach to or logically associate with the record an electronic sound, symbol, or process;
    9. “bank” means an organization that is engaged in the business of banking, including a savings bank, savings and loan association, credit union, and trust company;
    10. “beneficiary” has the meaning given in AS 45.05.102(a) ;
    11. “broker” has the meaning given in AS 45.08.102(a) ;
    12. “cash proceeds” means proceeds that are money, checks, deposit accounts, or the like;
    13. “certificate of title” means
      1. a certificate of title with respect to which a statute provides for the security interest in question to be indicated on the certificate as a condition or result of the security interest’s obtaining priority over the rights of a lien creditor with respect to the collateral;
      2. a record, other than a certificate of title described in (A) of this paragraph, maintained as an alternative to a certificate of title by the governmental unit that issues certificates of title if a statute permits the security interest in question to be indicated on the record as a condition or result of the security interest’s obtaining priority over the rights of a lien creditor with respect to the collateral;
    14. “certificated security” has the meaning given in AS 45.08.102(a) ;
    15. “chattel paper” means a record or records that evidence both a monetary obligation and a security interest in specific goods, a security interest in specific goods and software used in the goods, a security interest in specific goods and license of software used in the goods, a lease of specific goods, or a lease of specific goods and license of software used in the goods, except that “chattel paper” does not include charters or other contracts involving the use or hire of a vessel, or records that evidence a right to payment arising out of the use of a credit or charge card or information contained on or for use with the card; if a transaction is evidenced by records that include an instrument or series of instruments, the group of records taken together constitutes chattel paper; in this paragraph, “monetary obligation” means a monetary obligation secured by the goods or owed under a lease of the goods, and includes a monetary obligation with respect to software used in the goods;
    16. “check” has the meaning given in AS 45.03.104(f) ;
    17. “collateral” means the property subject to a security interest or agricultural lien, including
      1. proceeds to which a security interest attaches;
      2. accounts, chattel paper, payment intangibles, and promissory notes that have been sold; and
      3. goods that are the subject of a consignment;
    18. “commercial tort claim” means a claim arising in tort with respect to which the claimant is
      1. an organization; or
      2. an individual and the claim
        1. arose in the course of the claimant’s business or profession; and
        2. does not include damages arising out of personal injury to or the death of an individual;
    19. “commodity account” means an account maintained by a commodity intermediary in which a commodity contract is carried for a commodity customer;
    20. “commodity contract” means a commodity futures contract, an option on a commodity futures contract, a commodity option, or another contract if the contract or option is traded on
      1. or subject to the rules of a board of trade that has been designated as a contract market for the contract under federal commodities laws; or
      2. a foreign commodity board of trade, exchange, or market and is carried on the books of a commodity intermediary for a commodity customer;
    21. “commodity customer” means a person for whom a commodity intermediary carries a commodity contract on its books;
    22. “commodity intermediary” means a person who
      1. is registered as a futures commission merchant under federal commodities law; or
      2. in the ordinary course of its business, provides clearance or settlement services for a board of trade that has been designated as a contract market under federal commodities laws;
    23. “communicate” means
      1. to send a written or other tangible record;
      2. to transmit a record by any means agreed upon by the persons sending and receiving the record; or
      3. in the case of transmission of a record to or by a filing office, to transmit a record by any means prescribed by filing office regulation;
    24. “consignee” means a merchant to whom goods are delivered in a consignment;
    25. “consignment” means a transaction, regardless of its form, in which a person delivers goods to a merchant for the purpose of sale and
      1. the merchant
        1. deals in goods of that kind under a name other than the name of the person making delivery;
        2. is not an auctioneer; and
        3. is not generally known by the merchant’s creditors to be substantially engaged in selling the goods of others;
      2. with respect to each delivery, the aggregate value of the goods is $1,000 or more at the time of delivery;
      3. the goods are not consumer goods immediately before delivery; and
      4. the transaction does not create a security interest that secures an obligation;
    26. “consignor” means a person who delivers goods to a consignee in a consignment;
    27. “consumer goods” means goods that are used or bought for use primarily for personal, family, or household purposes;
    28. “consumer goods transaction” means a consumer transaction in which
      1. an individual incurs an obligation primarily for personal, family, or household purposes; and
      2. a security interest in consumer goods secures the obligation;
    29. “consumer obligor” means an obligor who is an individual and who incurred the obligation as part of a transaction entered into primarily for personal, family, or household purposes;
    30. “consumer transaction” means a transaction, including a consumer goods transaction, in which
      1. an individual incurs an obligation primarily for personal, family, or household purposes;
      2. a security interest secures the obligation; and
      3. the collateral is held or acquired primarily for personal, family, or household purposes;
    31. “continuation statement” means an amendment of a financing statement that
      1. identifies, by its file number, the initial financing statement to which it relates; and
      2. indicates that it is a continuation statement for, or that it is filed to continue the effectiveness of, the identified financing statement;
    32. “contract for sale” has the meaning given in AS 45.02.106(a) ;
    33. “control” has the meaning given in AS 45.07.116 ;
    34. “customer” has the meaning given in AS 45.04.104(a) ;
    35. “debtor” means
      1. a person having an interest, other than a security interest or other lien, in the collateral whether or not the person is an obligor;
      2. a seller of accounts, chattel paper, payment intangibles, or promissory notes; or
      3. a consignee;
    36. “deposit account” means a demand, time, savings, passbook, or similar account maintained with a bank except that the term does not include investment property or accounts evidenced by an instrument;
    37. “document” means a document of title or a receipt of the type described in AS 45.07.201(b) ;
    38. “electronic chattel paper” means chattel paper evidenced by a record or records consisting of information stored in an electronic medium;
    39. “encumbrance” means a right, other than an ownership interest, in real property, including mortgages and other liens on real property;
    40. “entitlement holder” has the meaning given in AS 45.08.102(a);
    41. “equipment” means goods other than inventory, farm products, or consumer goods;
    42. “farm products” means goods, other than standing timber, with respect to which the debtor is engaged in a farming operation and that are
      1. crops grown, growing, or to be grown, including
        1. crops produced on trees, vines, and bushes; and
        2. aquatic goods produced in aquacultural operations;
      2. livestock, born or unborn, including aquatic goods produced in aquacultural operations;
      3. supplies used or produced in a farming operation; or
      4. products of crops or livestock in their unmanufactured states;
    43. “farming operation” means raising, cultivating, propagating, fattening, grazing, or other farming, livestock, or aquacultural operation;
    44. “file number” means the number assigned to an initial financing statement under AS 45.29.519(a) ;
    45. “filing office” means an office designated in AS 45.29.501 as the place to file a financing statement;
    46. “filing office regulation” means a regulation adopted under AS 44.37.027 ;
    47. “financial asset” has the meaning given in AS 45.08.102(a);
    48. “financing statement” means a record or records composed of an initial financing statement and any filed record relating to the initial financing statement;
    49. “fixture filing” means the filing of a financing statement covering goods that are or are to become fixtures and satisfying AS 45.29.502(a) and (b), including the filing of a financing statement covering goods of a transmitting utility that are or are to become fixtures;
    50. “fixtures” means goods that have become so related to particular real property that an interest in them arises under real property law;
    51. “general intangible” means personal property, including payment intangibles, software, and things in action, other than accounts, chattel paper, commercial tort claims, deposit accounts, documents, goods, instruments, investment property, letter-of-credit rights, letters of credit, money, and, before extraction, oil, gas, or other minerals;
    52. [Repealed, § 113 ch 44 SLA 2009.]
    53. “goods” means things that are movable when a security interest attaches; the term includes (A) fixtures; (B) standing timber that is to be cut and removed under a conveyance or contract for sale; (C) the unborn young of animals; (D) crops grown, growing, or to be grown, even if the crops are produced on trees, vines, or bushes; and (E) manufactured homes; the term also includes a computer program embedded in goods and supporting information provided in connection with a transaction relating to the program if the program is associated with the goods in such a manner that it customarily is considered part of the goods or if, by becoming the owner of the goods, a person acquires a right to use the program in connection with the goods; the term does not include a computer program embedded in goods that consist solely of the medium in which the program is embedded; the term also does not include accounts, chattel paper, commercial tort claims, deposit accounts, documents, general intangibles, instruments, investment property, letter-of-credit rights, letters of credit, money, or, before extraction, oil, gas, or other minerals;
    54. “governmental unit” means
      1. a subdivision, agency, department, county, parish, municipality, or other unit of the government of the United States, a state, or a foreign country;
      2. an organization having a separate corporate existence if the organization is eligible to issue debt on which interest is exempt from income taxation under the laws of the United States;
    55. “health care insurance receivable” means an interest in or claim under a policy of insurance that is a right to payment of a monetary obligation for health-care goods or services provided;
    56. “holder in due course” has the meaning given in AS 45.03.302 ;
    57. “instrument” means a negotiable instrument or other writing that evidences a right to the payment of a monetary obligation and is not itself a security agreement or lease and is of a type that in ordinary course of business is transferred by delivery with any necessary endorsement or assignment; the term does not include
      1. investment property;
      2. letters of credit; or
      3. writings that evidence a right to payment arising out of the use of a credit or charge card or information contained on or for use with the card;
    58. “inventory” means goods, other than farm products, that
      1. are leased by a person as lessor;
      2. are held by a person for sale or lease or to be furnished under a contract of service;
      3. are furnished by a person under a contract of service; or
      4. consist of raw materials, work in process, or materials used or consumed in a business;
    59. “investment property” means a security, whether certificated or uncertificated, security entitlement, securities account, commodity contract, or commodity account;
    60. “issuer,” with respect to a
      1. letter of credit or letter-of-credit right, has the meaning given in AS 45.05.102(a);
      2. security, has the meaning given in AS 45.08.201 ;
      3. document of title, has the meaning given in AS 45.07.112 ;
    61. “jurisdiction of organization,” with respect to a registered organization, means the jurisdiction under whose law the organization is formed or organized;
    62. “lease,” “lease agreement,” “lease contract,” “leasehold interest,” “lessee,” “lessee in ordinary course of business,” “lessor,” and “lessor’s residual interest” have the meanings given in AS 45.12.103(a) ;
    63. “letter of credit” has the meaning given in AS 45.05.102(a);
    64. “letter-of-credit right” means a right to payment or performance under a letter of credit whether or not the beneficiary has demanded or is at the time entitled to demand payment or performance; the term does not include the right of a beneficiary to demand payment or performance under a letter of credit;
    65. “lien creditor” means
      1. a creditor who has acquired a lien on the property involved by attachment, levy, or the like;
      2. an assignee for benefit of creditors from the time of assignment;
      3. a trustee in bankruptcy from the date of the filing of the petition; or
      4. a receiver in equity from the time of appointment;
    66. “manufactured home” means a structure, transportable in one or more sections, that, in the traveling mode, is eight body feet or more in width or 40 body feet or more in length, or, when erected on site, is 320 or more square feet, and that is built on a permanent chassis and designed to be used as a dwelling with or without a permanent foundation when connected to the required utilities, and includes the plumbing, heating, air-conditioning, and electrical systems contained in the structure; the term includes a structure that meets all of the requirements of this paragraph except the size requirements and with respect to which the manufacturer voluntarily files a certification required by the United States Secretary of Housing and Urban Development and complies with the standards established under 42 U.S.C.;
    67. “manufactured home transaction” means a secured transaction
      1. that creates a purchase money security interest in a manufactured home, other than a manufactured home held as inventory; or
      2. in which a manufactured home, other than a manufactured home held as inventory, is the primary collateral;
    68. “merchant” has the meaning given in AS 45.02.104(a) ;
    69. “mortgage” means a consensual interest in real property, including fixtures, that secures payment or performance of an obligation;
    70. “negotiable instrument” has the meaning given in AS 45.03.104 ;
    71. “new debtor” means a person who becomes bound as debtor under AS 45.29.203(d) by a security agreement previously entered into by another person;
    72. “new value” means (A) money; (B) money’s worth in property, services, or new credit; or (C) release by a transferee of an interest in property previously transferred to the transferee; the term does not include an obligation substituted for another obligation;
    73. “nominated person” has the meaning given in AS 45.05.102(a);
    74. “noncash proceeds” means proceeds other than cash proceeds;
    75. “note” has the meaning given in AS 45.03.104 ;
    76. “obligor” means a person who, with respect to an obligation secured by a security interest in or an agricultural lien on the collateral, (A) owes payment or other performance of the obligation; (B) has provided property other than the collateral to secure payment or other performance of the obligation; or (C) is otherwise accountable in whole or in part for payment or other performance of the obligation; the term does not include issuers or nominated persons under a letter of credit;
    77. “original debtor,” except as used in AS 45.29.310(c) , means a person who, as debtor, entered into a security agreement to which a new debtor has become bound under AS 45.29.203(d) ;
    78. “payment intangible” means a general intangible under which the account debtor’s principal obligation is a monetary obligation;
    79. “person related to,” with respect to an
      1. individual, means
        1. the spouse of the individual;
        2. a brother, brother-in-law, sister, or sister-in-law of the individual;
        3. an ancestor or lineal descendant of the individual or the individual’s spouse; or
        4. another relative, by blood or marriage, of the individual or the individual’s spouse who shares the same home with the individual;
      2. an organization, means
        1. a person directly or indirectly controlling, controlled by, or under common control with the organization;
        2. an officer or director of, or a person performing similar functions with respect to, the organization;
        3. an officer or director of, or a person performing similar functions with respect to, a person described in (i) of this subparagraph;
        4. the spouse of an individual described in (i), (ii), or (iii) of this subparagraph; or
        5. an individual who is related by blood or marriage to an individual described in (i), (ii), (iii), or (iv) of this subparagraph and shares the same home with the individual;
    80. “proceeds,” except as used in AS 45.29.609(b) , means the following property:
      1. whatever is acquired upon the sale, lease, license, exchange, or other disposition of collateral;
      2. whatever is collected on, or distributed on account of, collateral;
      3. rights arising out of collateral;
      4. to the extent of the value of collateral, claims arising out of the loss, nonconformity, or interference with the use of, defects or infringement of rights in, or damage to the collateral; or
      5. to the extent of the value of collateral and to the extent payable to the debtor or the secured party, insurance payable by reason of the loss or nonconformity of, defects or infringement of rights in, or damage to the collateral;
    81. “proceeds of the letter of credit” has the meaning given “proceeds of a letter of credit” in AS 45.05.114(a) ;
    82. “promissory note” means an instrument that evidences a promise to pay a monetary obligation, does not evidence an order to pay, and does not contain an acknowledgment by a bank that the bank has received for deposit a sum of money or funds;
    83. “proposal” means a record authenticated by a secured party that includes the terms on which the secured party is willing to accept collateral in full or partial satisfaction of the obligation it secures under AS 45.29.620 45.29.622 ;
    84. “prove” has the meaning given in AS 45.03.103(a) ;
    85. “public organic record” means a record that is available to the public for inspection and that is
      1. a record consisting of the record initially filed with or issued by a state or the United States to form or organize an organization and a record filed with or issued by the state or the United States that amends or restates the initial record;
      2. an organic record of a business trust consisting of the record initially filed with a state and a record filed with the state that amends or restates the initial record if a statute of the state governing business trusts requires that the record be filed with the state; or
      3. a record consisting of legislation enacted by the legislature of a state or the United States Congress that forms or organizes an organization, a record amending the legislation, and a record filed with or issued by the state or the United States that amends or restates the name of the organization;
    86. “pursuant to a commitment,” with respect to an advance made or other value given by a secured party, means in accordance with a secured party’s obligation, whether or not a subsequent event of default or other event not within the secured party’s control has relieved or may relieve the secured party from its obligation;
    87. “record,” except as used in “for record,” “of record,” “record or legal title,” and “record owner,” 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;
    88. “registered organization” means an organization formed or organized solely under the law of a single state or the United States by the filing of a public organic record with, the issuance of a public organic record by, or the enactment of legislation by the state or the United States, including a business trust that is formed or organized under the law of a single state if a statute of the state governing business trusts requires that the business trust’s organic record be filed with the state;
    89. “sale” has the meaning given in AS 45.02.106(a) ;
    90. “secondary obligor” means an obligor to the extent that
      1. the obligor’s obligation is secondary; or
      2. the obligor has a right of recourse with respect to an obligation secured by collateral against the debtor or another obligor, or property of either;
    91. “secured party” means
      1. a person in whose favor a security interest is created or provided for under a security agreement, whether or not an obligation to be secured is outstanding;
      2. a person who holds an agricultural lien;
      3. a consignor;
      4. a person to which accounts, chattel paper, payment intangibles, or promissory notes have been sold;
      5. a trustee, indenture trustee, agent, collateral agent, or other representative in whose favor a security interest or agricultural lien is created or provided for; or
      6. a person who holds a security interest arising under AS 45.02.401 , 45.02.505 , 45.02.711(c) , AS 45.04.210 , AS 45.05.118 , or AS 45.12.508(e) ;
    92. “securities account” has the meaning given in AS 45.08.501(e) ;
    93. “securities intermediary” has the meaning given in AS 45.08.102(a);
    94. “security” has the meaning given in AS 45.08.102(a);
    95. “security agreement” means an agreement that creates or provides for a security interest;
    96. “security certificate” has the meaning given in AS 45.08.102(a);
    97. “security entitlement” has the meaning given in AS 45.08.102(a);
    98. “send,” in connection with a record or notification, means to
      1. deposit in the mail, deliver for transmission, or transmit by another usual means of communication, with postage or cost of transmission provided for, addressed to an address reasonable under the circumstances; or
      2. cause the record or notification to be received within the time that it would have been received if properly sent under (A) of this paragraph;
    99. “software” means a computer program and supporting information provided in connection with a transaction relating to the program; the term does not include a computer program that is included in the definition of “goods”;
    100. “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;
    101. “supporting obligation” means a letter-of-credit right or secondary obligation that supports the payment or performance of an account, chattel paper, a document, a general intangible, an instrument, or investment property;
    102. “tangible chattel paper” means chattel paper evidenced by a record or records consisting of information that is inscribed on a tangible medium;
    103. “termination statement” means an amendment of a financing statement that
      1. identifies by its file number the initial financing statement to which it relates; and
      2. indicates either that it is a termination statement or that the identified financing statement is no longer effective;
    104. “transmitting utility” means a person primarily engaged in the business of
      1. operating a railroad, subway, street railway, or trolley bus;
      2. transmitting communications electrically, electromagnetically, or by light;
      3. transmitting goods by pipeline or sewer; or
      4. transmitting or producing and transmitting electricity, steam, gas, or water;
    105. “uncertificated security” has the meaning given in AS 45.08.102(a).
  2. In addition, AS 45.01 contains general definitions and principles of construction and interpretation applicable throughout this chapter.

History. (§ 1 ch 113 SLA 2000; am §§ 96, 97, 113 ch 44 SLA 2009; am §§ 3 — 7 ch 64 SLA 2013)

Revisor’s notes. —

The paragraphs in this section were renumbered in 2006, 2009, and 2013 to retain alphabetical order.

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.

Administrative Code. —

For document recording and filing, see 11 AAC 6.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, repealed (a)(51) (now (a)(52)), which read, “‘good faith’ means honesty in fact and the observance of reasonable commercial standards of fair dealing;”; added (a)(59)(C) (now (a)(60)(C)); added (a)(104) (now (a)(33)).

The 2013 amendment, effective July 1, 2013, rewrote (a)(8)(B), which read “execute or otherwise adopt a symbol, or to encrypt or similarly process a record in whole or in part, with the present intent of the authenticating person to identify the person and adopt or accept a record”; added (a)(13)(B), and made a related change; in (a)(61), inserted “formed or” following “whose law the organization is”; rewrote (a)(87) (now (a)(88)), which read “‘registered organization’ means an organization organized solely under the law of a single state or the United States and as to which the state or the United States must maintain a public record showing the organization to have been organized”; added (a)(105) (now (a)(85)).

Notes to Decisions

In former AS 45.09.312(d), the term “debtor” was given the meaning ascribed to it in former AS 45.09.105 (a)(4). Brodie Hotel Supply, Inc. v. United States, 431 F.2d 1316 (9th Cir. Alaska 1970) (decided under former AS 45.09.105).

Test under which a document is determined to be a security agreement is one of intent to create a security interest in the collateral. Queen of the N., Inc. v. LeGrue, 582 P.2d 144 (Alaska 1978) (decided under former AS 45.09.105).

Liquor license qualifies as a “general intangible,” defined in former AS 45.09.106. Queen of the N., Inc. v. LeGrue, 582 P.2d 144 (Alaska 1978) (decided under former AS 45.09.106).

A liquor license could be the subject of a security interest under Alaska’s codification of Article 9 (former AS 45.09.101 — 45.09.507) of the Uniform Commercial Code. Queen of the N., Inc. v. LeGrue, 582 P.2d 144 (Alaska 1978) (decided under former AS 45.09.106).

Applied in

Crowley v. N. Aviation, LLC, 441 P.3d 407 (Alaska 2019).

Stated in

Moran v. Holman, 514 P.2d 817 (Alaska 1973) (decided under former AS 45.09.109).

Cited in

von Gemmingen v. First Nat'l Bank, 789 P.2d 353 (Alaska 1990) (decided under former AS 45.09.105).

Collateral references. —

What constitutes “consumer goods” under UCC § 9-109(1), 77 ALR3d 1225.

What constitutes “inventory” under UCC § 9-109(4), 77 ALR3d 1266.

Sec. 45.29.103. Purchase money security interest; application of payments; burden of establishing.

  1. In this section,
    1. “purchase money collateral” means goods or software that secures a purchase money obligation incurred with respect to that collateral; and
    2. “purchase money obligation” means an obligation of an obligor incurred as all or part of the price of the collateral or for value given to enable the debtor to acquire rights in or the use of the collateral if the value is in fact so used.
  2. A security interest in goods is a purchase money security interest
    1. to the extent that the goods are purchase money collateral with respect to that security interest;
    2. if the security interest is in inventory that is or was purchase money collateral, to the extent that the security interest secures a purchase money obligation incurred with respect to other inventory in which the secured party holds or held a purchase money security interest; and
    3. to the extent that the security interest secures a purchase money obligation incurred with respect to software in which the secured party holds or held a purchase money security interest.
  3. A security interest in software is a purchase money security interest to the extent that the security interest also secures a purchase money obligation incurred with respect to goods in which the secured party holds or held a purchase money security interest if the debtor acquired its interest in the software
    1. in an integrated transaction in which it acquired an interest in the goods; and
    2. for the principal purpose of using the software in the goods.
  4. The security interest of a consignor in goods that are the subject of a consignment is a purchase money security interest in inventory.
  5. In a transaction other than a consumer goods transaction, if the extent to which a security interest is a purchase money security interest depends on the application of a payment to a particular obligation, the payment must be applied
    1. in accordance with any reasonable method of application to which the parties agree;
    2. in the absence of the parties’ agreement to a reasonable method, in accordance with an intention of the obligor manifested at or before the time of payment; or
    3. in the absence of an agreement to a reasonable method and a timely manifestation of the obligor’s intention, in the following order:
      1. to obligations that are not secured; and
      2. if more than one obligation is secured, to obligations secured by purchase money security interests in the order in which those obligations were incurred.
  6. In a transaction, other than a consumer goods transaction, a purchase money security interest does not lose its status as such even if
    1. the purchase money collateral also secures an obligation that is not a purchase money obligation;
    2. collateral that is not purchase money collateral also secures the purchase money obligation; or
    3. the purchase money obligation has been renewed, refinanced, consolidated, or restructured.
  7. In a transaction other than a consumer goods transaction, a secured party claiming a purchase money security interest has the burden of establishing the extent to which the security interest is a purchase money security interest.
  8. The limitation of the rules in (e) — (g) of this section to transactions other than consumer goods transactions is intended to leave to the court the determination of the proper rules in consumer goods transactions. The court may not infer from that limitation the nature of the proper rule in consumer goods transactions and may continue to apply established approaches.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.104. Control of deposit account.

  1. A secured party has control of a deposit account if
    1. the secured party is the bank with which the deposit account is maintained;
    2. the debtor, secured party, and bank have agreed in an authenticated record that the bank will comply with instructions originated by the secured party directing disposition of the funds in the deposit account without further consent by the debtor; or
    3. the secured party becomes the bank’s customer with respect to the deposit account.
  2. A secured party that has satisfied (a) of this section has control even if the debtor retains the right to direct the disposition of funds from the deposit account.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.105. Control of electronic chattel paper.

  1. A secured party has control of electronic chattel paper if a system employed for evidencing the transfer of interests in the chattel paper reliably establishes the secured party as the person to which the chattel paper was assigned.
  2. A system satisfies (a) of this section if the record or records comprising the chattel paper are created, stored, and assigned in such a manner that
    1. a single authoritative copy of the record or records exists that is unique, identifiable, and, except as otherwise provided in (4) — (6) of this subsection, unalterable;
    2. the authoritative copy identifies the secured party as the assignee of the record or records;
    3. the authoritative copy is communicated to and maintained by the secured party or its 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 secured party;
    5. each copy of the authoritative copy and any copy of a copy is readily identifiable as a copy that is not the authoritative copy; and
    6. any amendment of the authoritative copy is readily identifiable as authorized or unauthorized.

History. (§ 1 ch 113 SLA 2000; am § 8 ch 64 SLA 2013)

Effect of amendments. —

The 2013 amendment, effective July 1, 2013, reorganized the section, in (a), added “a system employed for evidencing the transfer of interests in the chattel paper reliably establishes the secured party as the person to which the chattel paper was assigned” at the end; in (b), added “A system satisfies (a) of this section if” at the beginning, in (b)(1) substituted “subsection” for “section” preceding “, unalterable”; made stylistic changes in (b)(4) — (b)(6).

Sec. 45.29.106. Control of investment property.

  1. A person has control of a certificated security, uncertificated security, or security entitlement as provided in AS 45.08.106 .
  2. A secured party has control of a commodity contract if
    1. the secured party is the commodity intermediary with which the commodity contract is carried; or
    2. the commodity customer, secured party, and commodity intermediary have agreed that the commodity intermediary will apply any value distributed on account of the commodity contract as directed by the secured party without further consent by the commodity customer.
  3. A secured party having control of all security entitlements or commodity contracts carried in a securities account or commodity account has control over the securities account or commodity account.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.107. Control of letter-of-credit right.

A secured party has control of a letter-of-credit right to the extent of any right to payment or performance by the issuer or a nominated person if the issuer or nominated person has consented to an assignment of proceeds of the letter of credit under AS 45.05.114(c) or otherwise applicable law or practice.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.108. Sufficiency of description.

  1. Except as otherwise provided in (c) — (e) of this section, a description of personal or real property is sufficient, whether or not it is specific, if it reasonably identifies what is described.
  2. Except as otherwise provided in (d) of this section, a description of collateral reasonably identifies the collateral if it identifies the collateral by
    1. specific listing;
    2. category;
    3. except as otherwise provided in (e) of this section, a type of collateral defined in the code;
    4. quantity;
    5. computational or allocational formula or procedure; or
    6. except as otherwise provided in (c) of this section, another method if the identity of the collateral is objectively determinable.
  3. A description of collateral as “all the debtor’s assets” or “all the debtor’s personal property” or using words of similar import does not reasonably identify the collateral.
  4. Except as otherwise provided in (e) of this section, a description of a security entitlement, securities account, or commodity account is sufficient if it describes
    1. the collateral by those terms or as investment property; or
    2. the underlying financial asset or commodity contract.
  5. A description only by type of collateral defined in the code is an insufficient description of
    1. a commercial tort claim; or
    2. in a consumer transaction, consumer goods, a security entitlement, a securities account, or a commodity account.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.109. Scope.

  1. Except as otherwise provided in (c) and (d) of this section, this chapter applies to
    1. a transaction, regardless of its form, that creates a security interest in personal property or fixtures by contract;
    2. an agricultural lien;
    3. a sale of accounts, chattel paper, payment intangibles, or promissory notes;
    4. a consignment;
    5. a security interest arising under AS 45.02.401 , 45.02.505 , 45.02.711(c) , or AS 45.12.508(e) , as provided in AS 45.29.110 ; and
    6. a security interest arising under AS 45.04.210 or AS 45.05.118 .
  2. The application of this chapter to a security interest in a secured obligation is not affected by the fact that the obligation is itself secured by a transaction or interest to which this chapter does not apply.
  3. This chapter does not apply to the extent that
    1. a statute, regulation, or treaty of the United States preempts this chapter;
    2. another statute of this state expressly governs the creation, perfection, priority, or enforcement of a security interest created by this state or a governmental unit of this state;
    3. a statute of another state, a foreign country, or a governmental unit of another state or a foreign country, other than a statute generally applicable to security interests, expressly governs creation, perfection, priority, or enforcement of a security interest created by the state, country, or governmental unit; or
    4. the rights of a transferee beneficiary or nominated person under a letter of credit are independent and superior under AS 45.05.114 .
  4. This chapter does not apply to
    1. a landlord’s lien, other than an agricultural lien;
    2. a lien, other than an agricultural lien, given by statute or other rule of law for services or materials, but AS 45.29.333 applies with respect to priority of the lien;
    3. an assignment of a claim for wages, salary, or other compensation of an employee;
    4. a sale of accounts, chattel paper, payment intangibles, or promissory notes as part of a sale of the business out of which they arose;
    5. an assignment of accounts, chattel paper, payment intangibles, or promissory notes that is for the purpose of collection only;
    6. an assignment of a right to payment under a contract to an assignee that is also obligated to perform under the contract;
    7. an assignment of a single account, payment intangible, or promissory note to an assignee in full or partial satisfaction of a preexisting indebtedness;
    8. a transfer of an interest in or an assignment of a claim under a policy of insurance, other than an assignment by or to a health care provider of a health care insurance receivable and any subsequent assignment of the right to payment, but AS 45.29.315 and 45.29.322 apply with respect to proceeds and priorities in proceeds;
    9. an assignment of a right represented by a judgment, other than a judgment taken on a right to payment that was collateral;
    10. a right of recoupment or setoff, but
      1. AS 45.29.340 applies with respect to the effectiveness of rights of recoupment or setoff against deposit accounts; and
      2. AS 45.29.404 applies with respect to defenses or claims of an account debtor;
    11. the creation or transfer of an interest in or lien on real property, including a lease or rents thereunder, except to the extent that provision is made for
      1. liens on real property in AS 45.29.203 and 45.29.308 ;
      2. fixtures in AS 45.29.334 ;
      3. fixture filings in AS 45.29.501 , 45.29.502 , 45.29.512 , 45.29.516 , and 45.29.519 ; and
      4. security agreements covering personal and real property in AS 45.29.604 ;
    12. an assignment of a claim arising in tort, other than a commercial tort claim, but AS 45.29.315 and 45.29.322 apply with respect to proceeds and priorities in proceeds;
    13. an assignment of a deposit account in a consumer transaction, but AS 45.29.315 and 45.29.322 apply with respect to proceeds and priorities in proceeds; or
    14. notwithstanding (c)(2) of this section, a transfer by a government or governmental subdivision or agency.

History. (§ 1 ch 113 SLA 2000)

Notes to Decisions

Applicability of general contract law. —

Whether the validity of a given transaction is governed by the provisions of the Uniform Commercial Code must be determined before considering the applicability of general contract law. Blumenstein v. Phillips Ins. Ctr., 490 P.2d 1213 (Alaska 1971) (decided under former AS 45.09.102).

Test under which a document is determined to be a security agreement is one of intent to create a security interest in the collateral. Queen of the N., Inc. v. LeGrue, 582 P.2d 144 (Alaska 1978) (decided under former AS 45.09.102).

Conditional sales contract leaves mere security interest in seller. —

Alaska’s legislative policy regarding contracts for the sale of personal property treats a conditional sales contract as leaving a mere security interest in the seller. Department of Revenue v. Baxter, 486 P.2d 360 (Alaska 1971) (decided under former AS 45.09.102).

Former AS 45.09 can encompass a liquor license as “property” which may be pledged as security. Gibson v. Alaska Alcoholic Beverage Control Bd., 377 F. Supp. 151 (D. Alaska 1974) (decided under former AS 45.09.102).

AS 09.35.087 does not exempt liquor licenses from coverage under former AS 45.09. Gibson v. Alaska Alcoholic Beverage Control Bd., 377 F. Supp. 151 (D. Alaska 1974) (decided under former AS 45.09.102).

And such licenses are not excluded by former AS 45.09.104 (formerly AS 45.05.696). —

Gibson v. Alaska Alcoholic Beverage Control Bd., 377 F. Supp. 151 (D. Alaska 1974) (decided under former AS 45.09.102).

Security interest in entry permit illegal. —

Encumbrance or reservation of a security interest in a limited entry fishing permit is illegal under AS 16.43.150(g) . Brown v. Baker, 688 P.2d 943 (Alaska 1984) (decided under former AS 45.09.102).

Former AS 45.09.104 does not exclude liquor licenses. —

Former AS 45.09.104, which defines the scope of coverage under former AS 45.09, does not exclude liquor licenses. Gibson v. Alaska Alcoholic Beverage Control Bd., 377 F. Supp. 151 (D. Alaska 1974) (decided under former AS 45.09.104).

Application of state law where vessel repossessed without foreclosure. —

Where a vessel is repossessed upon default, but there is no foreclosure action, the Ship Mortgage Act is inapplicable; and former AS 45.09.104 does not preclude the application of former AS 45.09.503 — 45.09.505. Brown v. Baker, 688 P.2d 943 (Alaska 1984) (decided under former AS 45.09.104).

Collateral references. —

Priority as between statutory landlord’s lien and security interest perfected in accordance with Uniform Commercial Code, 99 ALR3d 1006.

Applicability of Article 9 of Uniform Commercial Code to assignment of rights under real-estate sales contract, lease agreement, or mortgage as collateral for separate transaction, 76 ALR4th 765.

Sec. 45.29.110. Security interests arising under AS 45.02 or AS 45.12.

A security interest arising under AS 45.02.401 , 45.02.505 , 45.02.711(c) , or AS 45.12.508(e) is subject to this chapter. However, until the debtor obtains possession of the goods,

  1. the security interest is enforceable even if AS 45.29.203(b)(3) has not been satisfied;
  2. filing is not required to perfect the security interest;
  3. the rights of the secured party after default by the debtor are governed by AS 45.02 or AS 45.12; and
  4. the security interest has priority over a conflicting security interest created by the debtor.

History. (§ 1 ch 113 SLA 2000)

Article 2. Security Agreements; Security Interests.

Sec. 45.29.201. General effectiveness of security agreement.

  1. Except as otherwise provided in the code, a security agreement is effective according to its terms between the parties, against purchasers of the collateral, and against creditors.
  2. A transaction subject to this chapter is subject to
    1. an applicable rule of law that establishes a different rule for consumers;
    2. another statute or regulation that regulates the rates, charges, agreements, and practices for loans, credit sales, or other extensions of credit; and
    3. consumer protection statutes or regulations.
  3. In case of conflict between this chapter and a rule of law, statute, or regulation described in (b) of this section, the rule of law, statute, or regulation controls. Failure to comply with a statute or regulation described in (b) of this section has only the effect the statute or regulation specifies.
  4. This chapter does not
    1. validate a rate, charge, agreement, or practice that violates a rule of law, statute, or regulation described in (b) of this section; or
    2. extend the application of the rule of law, statute, or regulation to a transaction not otherwise subject to it.

History. (§ 1 ch 113 SLA 2000)

Notes to Decisions

Security agreement requirement. —

Financing statement creditor filed provided no basis for a secured claim because there was no underlying security agreement between herself and the debtors. In re Brown, — B.R. — (Bankr. D. Alaska Nov. 17, 2008).

Sec. 45.29.202. Title to collateral immaterial.

Except as otherwise provided with respect to consignments or sales of accounts, chattel paper, payment intangibles, or promissory notes, the provisions of this chapter with regard to rights and obligations apply whether title to collateral is in the secured party or the debtor.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.203. Attachment and enforceability of security interest; proceeds; supporting obligations; formal requisites.

  1. A security interest attaches to collateral when it becomes enforceable against the debtor with respect to the collateral unless an agreement expressly postpones the time of attachment.
  2. Except as otherwise provided in (c) — (i) of this section, a security interest is enforceable against the debtor and third parties with respect to the collateral only if
    1. value has been given;
    2. the debtor has rights in the collateral or the power to transfer rights in the collateral to a secured party; and
    3. one of the following conditions is met:
      1. the debtor has authenticated a security agreement that provides a description of the collateral and, if the security interest covers timber to be cut, a description of the land concerned;
      2. the collateral is not a certificated security and is in the possession of the secured party under AS 45.29.313 under the debtor’s security agreement;
      3. the collateral is a certificated security in registered form, and the security certificate has been delivered to the secured party under AS 45.08.301 under the debtor’s security agreement; or
      4. the collateral is deposit accounts, electronic chattel paper, investment property, letter-of-credit rights, or electronic documents, and the secured party has control under AS 45.07.116 , AS 45.29.104 , 45.29.105 , 45.29.106 , or 45.29.107 under the debtor’s security agreement.
  3. The provisions of (b) of this section are subject to
    1. AS 45.04.210 on the security interest of a collecting bank;
    2. AS 45.05.118 on the security interest of a letter-of-credit issuer or nominated person;
    3. AS 45.29.110 on a security interest arising under AS 45.02 or AS 45.12; and
    4. AS 45.29.206 on security interests in investment property.
  4. A person becomes bound as debtor by a security agreement entered into by another person if, by operation of law other than this chapter or by contract,
    1. the security agreement becomes effective to create a security interest in the person’s property; or
    2. the person becomes generally obligated for the obligations of the other person, including the obligation secured under the security agreement, and acquires or succeeds to all or substantially all of the assets of the other person.
  5. If a new debtor becomes bound as debtor by a security agreement entered into by another person,
    1. the agreement satisfies (b)(3) of this section with respect to existing or after-acquired property of the new debtor to the extent the property is described in the agreement; and
    2. another agreement is not necessary to make a security interest in the property enforceable.
  6. The attachment of a security interest in collateral gives the secured party the rights to proceeds provided by AS 45.29.315 and is also attachment of a security interest in a supporting obligation for the collateral.
  7. The attachment of a security interest in a right to payment or performance secured by a security interest or other lien on personal or real property is also attachment of a security interest in the security interest, mortgage, or other lien.
  8. The attachment of a security interest in a securities account is also attachment of a security interest in the security entitlement carried in the securities account.
  9. The attachment of a security interest in a commodity account is also attachment of a security interest in the commodity contracts carried in the commodity account.

History. (§ 1 ch 113 SLA 2000; am § 98 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)(3)(D), added “or electronic documents” following “letter-or-credit rights,”; added “AS 45.07.116 ” following “has control under”; made a related stylistic change.

Notes to Decisions

Attachment of security interest. —

Under Alaska’s codification of the code, a security interest attaches only where: (1) there exists a written security agreement; (2) value is given by the creditor; and (3) the debtor has rights in the collateral. Queen of the N., Inc. v. LeGrue, 582 P.2d 144 (Alaska 1978) (decided under former AS 45.09.203).

Test under which a document is determined to be a security agreement is one of intent to create a security interest in the collateral. Queen of the N., Inc. v. LeGrue, 582 P.2d 144 (Alaska 1978) (decided under former AS 45.09.203).

Security agreement requirement. —

Financing statement creditor filed provided no basis for a secured claim because there was no underlying security agreement between herself and the debtors. In re Brown, — B.R. — (Bankr. D. Alaska Nov. 17, 2008).

Liquor license could qualify as a security interest under Alaska’s codification of Article 9 [Chapter 29 of Title 45] of the Uniform Commercial Code. Queen of the N., Inc. v. LeGrue, 582 P.2d 144 (Alaska 1978) (decided under former AS 45.09.203).

Transfer of claims under insurance policies. —

The rule that oral assignments for security where the collateral is not in the possession of the secured party are invalid does not apply to the transfer of a claim under a policy of insurance. McKnight v. Rice, Hoppner, Brown & Brunner, 678 P.2d 1330 (Alaska 1984) (decided under former AS 45.09.203).

Sec. 45.29.204. After-acquired property; future advances.

  1. Except as otherwise provided in (b) of this section, a security agreement may create or provide for a security interest in after-acquired collateral.
  2. A security interest does not attach under a term constituting an after-acquired property clause to
    1. consumer goods, other than an accession when given as additional security, unless the debtor acquires rights in them within 10 days after the secured party gives value; or
    2. a commercial tort claim.
  3. A security agreement may provide that collateral secures, or that accounts, chattel paper, payment intangibles, or promissory notes are sold in connection with, future advances or other value, whether or not the advances or value are given pursuant to a commitment.

History. (§ 1 ch 113 SLA 2000)

Notes to Decisions

Dragnet clauses. —

Two claims a bank filed against a corporation’s Chapter 11 bankruptcy estate were secured by business personal property and real property the corporation owned because a security agreement the corporation signed in 2002 contained a cross-collateralization provision, and the loans in question were subject to that provision. Alaska Fur Gallery v. First Nat'l Bank Alaska (In re Case No. A09-00196-DMD Alaska Fur Gallery, Inc.), 457 B.R. 764 (Bankr. D. Alaska 2011).

Where debtor’s loan documents plainly stated that collateral, in the form of a motor vehicle, pledged for one loan would secure other existing or future loans extended by her creditor, the creditor held a secured loan to the extent the value of the vehicle exceeded the amount debtor owed on the vehicle. In re Zaochney, — B.R. — (Bankr. D. Alaska Dec. 12, 2011).

Collateral references. —

Construction and effect of future advances clauses under UCC Article 9, 90 ALR4th 859.

Sec. 45.29.205. Use or disposition of collateral permissible.

  1. A security interest is not invalid or fraudulent against creditors solely because
    1. the debtor has the right or ability to
      1. use, commingle, or dispose of all or part of the collateral, including returned or repossessed goods;
      2. collect, compromise, enforce, or otherwise deal with collateral;
      3. accept the return of collateral or make repossessions; or
      4. use, commingle, or dispose of proceeds; or
    2. the secured party fails to require the debtor to account for proceeds or replace collateral.
  2. This section does not relax the requirements of possession if attachment, perfection, or enforcement of a security interest depends upon possession of the collateral by the secured party.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.206. Security interest arising in purchase or delivery of financial asset.

  1. A security interest in favor of a securities intermediary attaches to a person’s security entitlement if
    1. the person buys a financial asset through the securities intermediary in a transaction in which the person is obligated to pay the purchase price to the securities intermediary at the time of the purchase; and
    2. the securities intermediary credits the financial asset to the buyer’s securities account before the buyer pays the securities intermediary.
  2. The security interest described in (a) of this section secures the person’s obligation to pay for the financial asset.
  3. A security interest in favor of a person who delivers a certificated security or other financial asset represented by a writing attaches to the security or other financial asset if
    1. the security or other financial asset
      1. in the ordinary course of business, is transferred by delivery with any necessary endorsement or assignment; and
      2. is delivered under an agreement between persons in the business of dealing with such securities or financial assets; and
    2. the agreement calls for delivery against payment.
  4. The security interest described in (c) of this section secures the obligation to make payment for the delivery.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.207. Rights and duties of secured party having possession or control of collateral.

  1. Except as otherwise provided in (d) of this section, a secured party shall use reasonable care in the custody and preservation of collateral in the secured party’s possession. In the case of chattel paper or an instrument, reasonable care includes taking necessary steps to preserve rights against prior parties unless otherwise agreed.
  2. Except as otherwise provided in (d) of this section, if a secured party has possession of collateral,
    1. reasonable expenses, including the cost of insurance and payment of taxes or other charges, incurred in the custody, preservation, use, or operation of the collateral are chargeable to the debtor and are secured by the collateral;
    2. the risk of accidental loss or damage is on the debtor to the extent of a deficiency in any effective insurance coverage;
    3. the secured party shall keep the collateral identifiable, but fungible collateral may be commingled; and
    4. the secured party may use or operate the collateral
      1. for the purpose of preserving the collateral or its value;
      2. as permitted by an order of a court having competent jurisdiction; or
      3. except in the case of consumer goods, in the manner and to the extent agreed by the debtor.
  3. Except as otherwise provided in (d) of this section, a secured party having possession of collateral or control of collateral under AS 45.07.116 , AS 45.29.104 , 45.29.105 , 45.29.106 , or 45.29.107
    1. may hold as additional security any proceeds, except money or funds, received from the collateral;
    2. shall apply money or funds received from the collateral to reduce the secured obligation unless remitted to the debtor; and
    3. may create a security interest in the collateral.
  4. If the secured party is a buyer of accounts, chattel paper, payment intangibles, or promissory notes or a consignor,
    1. the provisions of (a) of this section do not apply unless the secured party is entitled under an agreement
      1. to charge back uncollected collateral; or
      2. otherwise to full or limited recourse against the debtor or a secondary obligor based on the nonpayment or other default of an account debtor or other obligor on the collateral; and
    2. the provisions of (b) and (c) of this section do not apply.

History. (§ 1 ch 113 SLA 2000; am § 99 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 (c), added “AS 45.07.116 ” following “control of collateral under”.

Notes to Decisions

Where depreciating collateral retained unduly long period of time. —

When a secured party retains collateral that depreciates in value, such as a motor vehicle, for an unduly long period of time and uses the vehicle as his own, the debtor may validly claim that his obligation has been satisfied. To rule otherwise would permit overreaching and inequitable abuses by some secured parties. Moran v. Holman, 514 P.2d 817 (Alaska 1973) (decided under former AS 45.09.207).

Cited in

Native Alaskan Reclamation & Pest Control v. United Bank Alaska, 685 P.2d 1211 (Alaska 1984) (decided under former AS 45.09.207).

Collateral references. —

Duty of pledgee of stock, bonds, or similar securities to protect their value during period of pledge, under UCC § 9-207, 68 ALR3d 657.

Secured party’s duty under UCC § 9-207(2)(c) to reduce secured obligation by increase or profits received from collateral, 45 ALR4th 394.

Sec. 45.29.208. Additional duties of secured party having control of collateral.

  1. This section applies to a case in which there is no outstanding secured obligation and the secured party is not committed to make advances, incur obligations, or otherwise give value.
  2. Within 10 days after receiving an authenticated demand by the debtor, a secured party
    1. having control of a deposit account under AS 45.29.104(a)(2) shall send to the bank with which the deposit account is maintained an authenticated statement that releases the bank from further obligation to comply with instructions originated by the secured party;
    2. having control of a deposit account under AS 45.29.104(a)(3) shall
      1. pay the debtor the balance on deposit in the deposit account; or
      2. transfer the balance on deposit into a deposit account in the debtor’s name;
    3. other than a buyer, having control of electronic chattel paper under AS 45.29.105 shall
      1. communicate the authoritative copy of the electronic chattel paper to the debtor or its designated custodian;
      2. if the debtor designates a custodian that is the designated custodian with which the authoritative copy of the electronic chattel paper is maintained for the secured party, communicate to the custodian an authenticated record releasing the designated custodian from further obligation to comply with instructions originated by the secured party and instructing the custodian to comply with instructions originated by the debtor; and
      3. take appropriate action to enable the debtor or its designated custodian to make copies of or revisions to the authoritative copy that add or change an identified assignee of the authoritative copy without the consent of the secured party;
    4. having control of investment property under AS 45.08.106(d)(2) or AS 45.29.106(b) shall send to the securities intermediary or commodity intermediary with which the security entitlement or commodity contract is maintained an authenticated record that releases the securities intermediary or commodity intermediary from further obligation to comply with entitlement orders or directions originated by the secured party;
    5. having control of a letter-of-credit right under AS 45.29.107 shall send to each person having an unfulfilled obligation to pay or deliver proceeds of the letter of credit to the secured party an authenticated release from further obligation to pay or deliver proceeds of the letter of credit to the secured party; and
    6. having control of an electronic document shall
      1. give control of the electronic document to the debtor or its designated custodian;
      2. if the debtor designates a custodian who is the designated custodian with whom the authoritative copy of the electronic document is maintained for the secured party, communicate to the custodian an authenticated record releasing the designated custodian from further obligation to comply with instructions originated by the secured party and instructing the custodian to comply with instructions originated by the debtor; and
      3. take appropriate action to enable the debtor or its designated custodian to make copies of or revisions to the authoritative copy that add or change an identified assignee of the authoritative copy without the consent of the secured party.

History. (§ 1 ch 113 SLA 2000; am § 100 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 (b)(6), and made stylistic changes.

Sec. 45.29.209. Duties of secured party if account debtor has been notified of assignment.

  1. Except as otherwise provided in (c) of this section, this section applies to a case in which
    1. there is no outstanding secured obligation; and
    2. the secured party is not committed to make advances, incur obligations, or otherwise give value.
  2. Within 10 days after receiving an authenticated demand by the debtor, a secured party shall send to an account debtor that has received notification of an assignment to the secured party as assignee under AS 45.29.406(a) an authenticated record that releases the account debtor from further obligation to the secured party.
  3. This section does not apply to an assignment constituting the sale of an account, chattel paper, or payment intangible.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.210. Request for accounting; request regarding list of collateral or statement of account.

  1. In this section,
    1. “request” means a record of a type described in (2), (3), or (4) of this subsection;
    2. “request for an accounting” means a record authenticated by a debtor requesting that the recipient provide an accounting of the unpaid obligations secured by collateral and reasonably identifying the transaction or relationship that is the subject of the request;
    3. “request regarding a list of collateral” means a record authenticated by a debtor requesting that the recipient approve or correct a list of what the debtor believes to be the collateral securing an obligation and reasonably identifying the transaction or relationship that is the subject of the request;
    4. “request regarding a statement of account” means a record authenticated by a debtor requesting that the recipient approve or correct a statement indicating what the debtor believes to be the aggregate amount of unpaid obligations secured by collateral as of a specified date and reasonably identifying the transaction or relationship that is the subject of the request.
  2. Subject to (c) — (f) of this section, a secured party, other than a buyer of accounts, chattel paper, payment intangibles, or promissory notes or a consignor, shall comply with a request within 14 days after receipt
    1. in the case of a request for an accounting, by authenticating and sending to the debtor an accounting; and
    2. in the case of a request regarding a list of collateral or a request regarding a statement of account, by authenticating and sending to the debtor an approval or correction.
  3. A secured party that claims a security interest in all of a particular type of collateral owned by the debtor may comply with a request regarding a list of collateral by sending to the debtor an authenticated record including a statement to that effect within 14 days after receipt.
  4. A person who receives a request regarding a list of collateral, who claims no interest in the collateral when the person receives the request, and who claimed an interest in the collateral at an earlier time shall comply with the request within 14 days after receipt by sending to the debtor an authenticated record
    1. disclaiming interest in the collateral; and
    2. if known to the recipient, providing the name and mailing address of an assignee of or successor to the recipient’s interest in the collateral.
  5. A person who receives a request for an accounting or a request regarding a statement of account, who claims no interest in the obligations when the person receives the request, and who claimed an interest in the obligations at an earlier time shall comply with the request within 14 days after receipt by sending to the debtor an authenticated record
    1. disclaiming interest in the obligations; and
    2. if known to the recipient, providing the name and mailing address of an assignee of or successor to the recipient’s interest in the obligations.
  6. A debtor is entitled without charge to one response to a request under this section during a six-month period. The secured party may require payment of a charge not exceeding $25 for each additional response.

History. (§ 1 ch 113 SLA 2000)

Notes to Decisions

Cited in

Kazan v. Dough Boys, Inc., 201 P.3d 508 (Alaska 2009).

Article 3. Perfection and Priority.

Sec. 45.29.301. Law governing perfection and priority of security interests.

Except as otherwise provided in AS 45.29.303 45.29.306 , the following rules determine the law governing perfection, the effect of perfection or nonperfection, and the priority of a security interest in collateral:

  1. except as otherwise provided in this section, while a debtor is located in a jurisdiction, the local law of that jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in collateral;
  2. while collateral is located in a jurisdiction, the local law of that jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of a possessory security interest in that collateral;
  3. except as otherwise provided in (4) of this section, while tangible negotiable documents, goods, instruments, money, or tangible chattel paper is located in a jurisdiction, the local law of that jurisdiction governs
    1. perfection of a security interest in the goods by filing a fixture filing;
    2. perfection of a security interest in timber to be cut; and
    3. the effect of perfection or nonperfection and the priority of a nonpossessory security interest in the collateral;
  4. the local law of the jurisdiction in which the wellhead or minehead is located governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in as-extracted collateral.

History. (§ 1 ch 113 SLA 2000; am § 101 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), added “tangible” preceding “negotiable documents, goods, instruments, money”.

Sec. 45.29.302. Law governing perfection and priority of agricultural liens.

While farm products are located in a jurisdiction, the local law of that jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of an agricultural lien on the farm products.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.303. Law governing perfection and priority of security interests in goods covered by a certificate of title.

  1. This section applies to goods covered by a certificate of title even if there is no other relationship between the jurisdiction under whose certificate of title the goods are covered and the goods or the debtor.
  2. Goods become covered by a certificate of title when a valid application for the certificate of title and the applicable fee are delivered to the appropriate authority. Goods cease to be covered by a certificate of title at the earlier of the time
    1. the certificate of title ceases to be effective under the law of the issuing jurisdiction; or
    2. the goods become covered subsequently by a certificate of title issued by another jurisdiction.
  3. The local law of the jurisdiction under whose certificate of title the goods are covered governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in goods covered by a certificate of title from the time the goods become covered by the certificate of title until the goods cease to be covered by the certificate of title.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.304. Law governing perfection and priority of security interests in deposit accounts.

  1. The local law of a bank’s jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in a deposit account maintained with that bank.
  2. The following rules determine a bank’s jurisdiction for purposes of AS 45.29.301 45.29.342 :
    1. if an agreement between the bank and the debtor governing the deposit account expressly provides that a particular jurisdiction is the bank’s jurisdiction for purposes of AS 45.29.301 45.29.342 , this chapter, or the code, that jurisdiction is the bank’s jurisdiction;
    2. if (1) of this subsection does not apply and an agreement between the bank and its customer governing the deposit account expressly provides that the agreement is governed by the law of a particular jurisdiction, that jurisdiction is the bank’s jurisdiction;
    3. if neither (1) nor (2) of this subsection applies and an agreement between the bank and its customer governing the deposit account expressly provides that the deposit account is maintained at an office in a particular jurisdiction, that jurisdiction is the bank’s jurisdiction;
    4. if (1), (2), or (3) of this subsection does not apply, the bank’s jurisdiction is the jurisdiction in which the office identified in an account statement as the office serving the customer’s account is located;
    5. if (1), (2), (3), or (4) of this subsection does not apply, the bank’s jurisdiction is the jurisdiction in which the chief executive office of the bank is located.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.305. Law governing perfection and priority of security interests in investment property.

  1. Except as otherwise provided in (c) of this section, the following rules apply:
    1. while a security certificate is located in a jurisdiction, the local law of that jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in the certificated security represented by the security certificate;
    2. the local law of the issuer’s jurisdiction as specified in AS 45.08.110 governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in an uncertificated security;
    3. the local law of the securities intermediary’s jurisdiction as specified in AS 45.08.110(e) governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in a security entitlement or securities account;
    4. the local law of the commodity intermediary’s jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in a commodity contract or commodity account.
  2. The following rules determine a commodity intermediary’s jurisdiction for purposes of AS 45.29.301 45.29.342 :
    1. if an agreement between the commodity intermediary and commodity customer governing the commodity account expressly provides that a particular jurisdiction is the commodity intermediary’s jurisdiction for purposes of AS 45.29.301 45.29.342 , this chapter, or the code, that jurisdiction is the commodity intermediary’s jurisdiction;
    2. if (1) of this subsection does not apply and an agreement between the commodity intermediary and commodity customer governing the commodity account expressly provides that the agreement is governed by the law of a particular jurisdiction, that jurisdiction is the commodity intermediary’s jurisdiction;
    3. if neither (1) nor (2) of this subsection applies and an agreement between the commodity intermediary and commodity customer governing the commodity account expressly provides that the commodity account is maintained at an office in a particular jurisdiction, that jurisdiction is the commodity intermediary’s jurisdiction;
    4. if (1), (2), or (3) of this subsection does not apply, the commodity intermediary’s jurisdiction is the jurisdiction in which the office identified in an account statement as the office serving the commodity customer’s account is located;
    5. if (1), (2), (3), or (4) of this subsection does not apply, the commodity intermediary’s jurisdiction is the jurisdiction in which the chief executive office of the commodity intermediary is located.
  3. The local law of the jurisdiction in which the debtor is located governs
    1. perfection of a security interest in investment property by filing;
    2. automatic perfection of a security interest in investment property created by a broker or securities intermediary; and
    3. automatic perfection of a security interest in a commodity contract or commodity account created by a commodity intermediary.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.306. Law governing perfection and priority of security interests in letter-of-credit rights.

  1. Subject to (c) of this section, the local law of the issuer’s jurisdiction or a nominated person’s jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in a letter-of-credit right if the issuer’s jurisdiction or nominated person’s jurisdiction is a state.
  2. For purposes of AS 45.29.301 45.29.342 , an issuer’s jurisdiction or nominated person’s jurisdiction is the jurisdiction whose law governs the liability of the issuer or nominated person with respect to the letter-of-credit right as provided in AS 45.05.116 .
  3. This section does not apply to a security interest that is perfected only under AS 45.29.308(d) .

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.307. Location of debtor.

  1. In this section, “place of business” means a place where a debtor conducts its affairs.
  2. Except as otherwise provided in this section, the following rules determine a debtor’s location:
    1. a debtor who is an individual is located at the individual’s principal residence;
    2. a debtor that is an organization and has only one place of business is located at its place of business;
    3. a debtor that is an organization and has more than one place of business is located at its chief executive office.
  3. The provisions of (b) of this section apply only if a debtor’s residence, place of business, or chief executive office, as applicable, is located in a jurisdiction whose law generally requires information concerning the existence of a nonpossessory security interest to be made generally available in a filing, recording, or registration system as a condition or result of the security interest’s obtaining priority over the rights of a lien creditor with respect to the collateral. If (b) of this section does not apply, the debtor is located in the District of Columbia.
  4. A person who ceases to exist, have a residence, or have a place of business continues to be located in the jurisdiction specified by (b) and (c) of this section.
  5. A registered organization that is organized under the law of a state is located in that state.
  6. Except as otherwise provided in (i) of this section, a registered organization that is organized under the law of the United States and a branch or agency of a bank that is not organized under the law of the United States or a state are located
    1. in the state that the law of the United States designates if the law designates a state of location;
    2. in the state that the registered organization, branch, or agency designates if the law of the United States authorizes the registered organization, branch, or agency to designate its state of location, including by designating its main office, home office, or other comparable office; or
    3. in the District of Columbia if neither (1) nor (2) of this subsection applies.
  7. A registered organization continues to be located in the jurisdiction specified by (e) or (f) of this section notwithstanding
    1. the suspension, revocation, forfeiture, or lapse of the registered organization’s status as such in its jurisdiction of organization; or
    2. the dissolution, winding up, or cancellation of the existence of the registered organization.
  8. The United States is located in the District of Columbia.
  9. A branch or agency of a bank that is not organized under the law of the United States or a state is located in the state in which the branch or agency is licensed if all branches and agencies of the bank are licensed in only one state.
  10. A foreign air carrier, under the Federal Aviation Act of 1958, as amended, is located at the designated office of the agent upon which service of process may be made on behalf of the carrier.
  11. This section applies only for purposes of AS 45.29.301 45.29.342 .

History. (§ 1 ch 113 SLA 2000; am § 9 ch 64 SLA 2013)

Effect of amendments. —

The 2013 amendment, effective July 1, 2013, at the end of (f)(2), added “, including by designating its main office, home office, or other comparable office”.

Editor’s notes. —

Federal Aviation Act of 1958, referred to in subsection (j), may be found at 49 USC 41301 et seq.

Sec. 45.29.308. When security interest or agricultural lien is perfected; continuity of perfection.

  1. Except as otherwise provided in this section and AS 45.29.309 , a security interest is perfected if it has attached and all of the applicable requirements for perfection in AS 45.29.310 45.29.316 have been satisfied. A security interest is perfected when it attaches if the applicable requirements are satisfied before the security interest attaches.
  2. An agricultural lien is perfected if it has become effective and all of the applicable requirements for perfection in AS 45.29.310 have been satisfied. An agricultural lien is perfected when it becomes effective if the applicable requirements are satisfied before the agricultural lien becomes effective.
  3. A security interest or agricultural lien is perfected continuously if it is originally perfected by one method under this chapter and is later perfected by another method under this chapter, without an intermediate period when it was unperfected.
  4. Perfection of a security interest in collateral also perfects a security interest in a supporting obligation for the collateral.
  5. Perfection of a security interest in a right to payment or performance also perfects a security interest in a security interest, mortgage, or other lien on personal or real property securing the right.
  6. Perfection of a security interest in a securities account also perfects a security interest in the security entitlements carried in the securities account.
  7. Perfection of a security interest in a commodity account also perfects a security interest in the commodity contracts carried in the commodity account.

History. (§ 1 ch 113 SLA 2000)

Collateral references. —

Construction and effect of UCC Art. 9, dealing with secured transactions, sales of accounts, contract rights, and chattel paper, 30 ALR3d 9; 67 ALR3d 308; 69 ALR3d 1162; 76 ALR3d 11; 99 ALR3d 807; 99 ALR3d 1080; 100 ALR3d 10; 100 ALR3d 940; 7 ALR4th 308; 11 ALR4th 241; 90 ALR4th 859; 25 ALR5th 696.

Sec. 45.29.309. Security interest perfected upon attachment.

The following security interests are perfected when they attach:

  1. a purchase money security interest in consumer goods, except as otherwise provided in AS 45.29.311(b) with respect to consumer goods that are subject to a statute or treaty described in AS 45.29.311(a) ;
  2. an assignment of accounts or payment intangibles that does not, by itself or in conjunction with other assignments to the same assignee, transfer a significant part of the assignor’s outstanding accounts or payment intangibles;
  3. a sale of a payment intangible;
  4. a sale of a promissory note;
  5. a security interest created by the assignment of a health care insurance receivable to the provider of the health care goods or services;
  6. a security interest arising under AS 45.02.401 , 45.02.505 , 45.02.711(c) , or AS 45.12.508(e) , until the debtor obtains possession of the collateral;
  7. a security interest of a collecting bank arising under AS 45.04.210 ;
  8. a security interest of an issuer or nominated person arising under AS 45.05.118 ;
  9. a security interest arising in the delivery of a financial asset under AS 45.29.206(c) ;
  10. a security interest in investment property created by a broker or securities intermediary;
  11. a security interest in a commodity contract or a commodity account created by a commodity intermediary;
  12. an assignment for the benefit of all creditors of the transferor and subsequent transfers by the assignee thereunder; and
  13. a security interest created by an assignment of a beneficial interest in a decedent’s estate.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.310. When filing required to perfect security interest or agricultural lien; security interests and agricultural liens to which filing provisions do not apply.

  1. Except as otherwise provided in (b) of this section and AS 45.29.312(b) , a financing statement must be filed to perfect all security interests and agricultural liens.
  2. The filing of a financing statement is not necessary to perfect a security interest
    1. that is perfected under AS 45.29.308(d) , (e), (f), or (g);
    2. that is perfected under AS 45.29.309 when it attaches;
    3. in property subject to a statute, regulation, or treaty described in AS 45.29.311(a) ;
    4. in goods in possession of a bailee that is perfected under AS 45.29.312(d)(1) or (2);
    5. in certificated securities, documents, goods, or instruments that is perfected without filing, control, or possession under AS 45.29.312(e) , (f), or (g);
    6. in collateral in the secured party’s possession under AS 45.29.313 ;
    7. in a certificated security that is perfected by delivery of the security certificate to the secured party under AS 45.29.313 ;
    8. in deposit accounts, electronic chattel paper, electronic documents, investment property, or letter-of-credit rights that is perfected by control under AS 45.29.314 ;
    9. in proceeds that is perfected under AS 45.29.315 ; or
    10. that is perfected under AS 45.29.316 .
  3. If a secured party assigns a perfected security interest or agricultural lien, a filing under this chapter is not required to continue the perfected status of the security interest against creditors of and transferees from the original debtor.

History. (§ 1 ch 113 SLA 2000; am § 102 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)(5), added “, control,” preceding “or possession under”; in (b)(8), added “electronic documents,” preceding “investment property”.

Notes to Decisions

Former 45.09.302 required filing to perfect a conditional sale agreement. Blumenstein v. Phillips Ins. Ctr., 490 P.2d 1213 (Alaska 1971) (decided under former AS 45.09.302).

Surety’s right to earned progress payments does not qualify as an interest in personal property subject to the filing provisions of the code since the surety has the right to complete the job it has bonded and apply any earned funds against its costs. This does not secure the payment or performance of an obligation as a “security interest” as that term is defined in AS 45.01.201 . Alaska State Bank v. General Ins. Co., 579 P.2d 1362 (Alaska 1978) (decided under former AS 45.09.302).

Quoted in

Newell v. National Bank, 646 P.2d 224 (Alaska 1982) (decided under former AS 45.09.302).

Cited in

Fehir v. State, 755 P.2d 1107 (Alaska 1988) (decided under former AS 45.09.302).

Collateral references. —

Construction and effect of UCC Art. 9, dealing with secured transactions, sales of accounts, contract rights, and chattel paper, 30 ALR3d 9.

Determination of purchase price of farm equipment for purposes of UCC § 9-302(1)(c) excusing filing of financing statement, 85 ALR3d 1037.

When is filing of financing statement necessary to perfect an assignment of accounts under UCC § 9-302(1)(e), 85 ALR3d 1050.

Sec. 45.29.311. Perfection of security interests in property subject to certain statutes, regulations, and treaties.

  1. Except as otherwise provided in (d) of this section, the filing of a financing statement is not necessary or effective to perfect a security interest in property subject to
    1. a statute, regulation, or treaty of the United States whose requirements for a security interest’s obtaining priority over the rights of a lien creditor with respect to the property preempt AS 45.29.310(a) ;
    2. AS 28.10; however, during a period in which collateral is inventory held for sale by a person who is in the business of selling goods of that kind, the filing provisions of AS 45.29.501 45.29.525 apply to a security interest in that collateral created by that person as debtor; or
    3. a statute of another jurisdiction that provides for a security interest to be indicated on a certificate of title as a condition or result of the security interest’s obtaining priority over the rights of a lien creditor with respect to the property.
  2. Compliance with the requirements of a statute, regulation, or treaty described in (a) of this section for obtaining priority over the rights of a lien creditor is equivalent to the filing of a financing statement under this chapter. Except as otherwise provided in (d) of this section, AS 45.29.313 , and 45.29.316(d) and (e) for goods covered by a certificate of title, a security interest in property subject to a statute, regulation, or treaty described in (a) of this section may be perfected only by compliance with those requirements, and a security interest so perfected remains perfected notwithstanding a change in the use or transfer of possession of the collateral.
  3. Except as otherwise provided in (d) of this section and AS 45.29.316(d) and (e), duration and renewal of perfection of a security interest perfected by compliance with the requirements prescribed by a statute, regulation, or treaty described in (a) of this section are governed by the statute, regulation, or treaty. In other respects, the security interest is subject to this chapter.
  4. During a period in which collateral subject to a statute specified in (a)(2) of this section is inventory held for sale or lease by a person or leased by that person as lessor and that person is in the business of selling goods of that kind, this section does not apply to a security interest in that collateral created by that person.

History. (§ 1 ch 113 SLA 2000; am § 10 ch 64 SLA 2013)

Revisor’s notes. —

In 2006, in (a)(2) of this section, “AS 45.29.501 45.29.525 ” was substituted for “AS 45.29.501 — 45.29.527” to correct a manifest error in ch. 113, SLA 2000.

Effect of amendments. —

The 2013 amendment, effective July 1, 2013, rewrote the first part of (a)(3), which read “a certificate-of-title statute of another jurisdiction that provides for a security interest to be indicated on the certificate”.

Sec. 45.29.312. Perfection of security interests in chattel paper, deposit accounts, documents, goods covered by documents, instruments, investment property, letter-of-credit rights, and money; perfection by permissive filing; temporary perfection without filing or transfer of possession.

  1. A security interest in chattel paper, negotiable documents, instruments, or investment property may be perfected by filing.
  2. Except as otherwise provided in AS 45.29.315(c) and (d) for proceeds,
    1. a security interest in a deposit account may be perfected only by control under AS 45.29.314 ;
    2. and except as otherwise provided in AS 45.29.308(d) , a security interest in a letter-of-credit right may be perfected only by control under AS 45.29.314 ; and
    3. a security interest in money may be perfected only by the secured party’s taking possession under AS 45.29.313 .
  3. While goods are in the possession of a bailee that has issued a negotiable document covering the goods, a security interest
    1. in the goods may be perfected by perfecting a security interest in the document; and
    2. perfected in the document has priority over a security interest that becomes perfected in the goods by another method during that time.
  4. While goods are in the possession of a bailee that has issued a nonnegotiable document covering the goods, a security interest in the goods may be perfected by
    1. issuance of a document in the name of the secured party;
    2. the bailee’s receipt of notification of the secured party’s interest; or
    3. filing as to the goods.
  5. A security interest in certificated securities, negotiable documents, or instruments is perfected without filing or the taking of possession or control for a period of 20 days from the time the security interest attaches to the extent that it arises for new value given under an authenticated security agreement.
  6. A perfected security interest in a negotiable document or goods in possession of a bailee, other than one that has issued a negotiable document for the goods, remains perfected for 20 days without filing if the secured party makes available to the debtor the goods or documents representing the goods for the purpose of
    1. ultimate sale or exchange; or
    2. loading, unloading, storing, shipping, transshipping, manufacturing, processing, or otherwise dealing with the goods or documents representing the goods in a manner preliminary to their sale or exchange.
  7. A perfected security interest in a certificated security or instrument remains perfected for 20 days without filing if the secured party delivers the security certificate or instrument to the debtor for the purpose of
    1. ultimate sale or exchange; or
    2. presentation, collection, enforcement, renewal, or registration of transfer.
  8. After the 20-day period specified in (e), (f), or (g) of this section expires, perfection depends upon compliance with this chapter.

History. (§ 1 ch 113 SLA 2000; am § 103 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 (e), added “or control” following “taking of possession”.

Sec. 45.29.313. When possession by or delivery to secured party perfects security interest without filing.

  1. Except as otherwise provided in (b) of this section, a secured party may perfect a security interest in tangible negotiable documents, goods, instruments, money, or tangible chattel paper by taking possession of the collateral. A secured party may perfect a security interest in certificated securities by taking delivery of the certificated securities under AS 45.08.301 .
  2. With respect to goods covered by a certificate of title issued by this state, a secured party may perfect a security interest in the goods by taking possession of the goods only in the circumstances described in AS 45.29.316(d) .
  3. With respect to collateral other than certificated securities and goods covered by a document, a secured party takes possession of collateral in the possession of a person other than the debtor, the secured party, or a lessee of the collateral from the debtor in the ordinary course of the debtor’s business, when the person
    1. in possession authenticates a record acknowledging that the person holds possession of the collateral for the secured party’s benefit; or
    2. takes possession of the collateral after having authenticated a record acknowledging that it will hold possession of collateral for the secured party’s benefit.
  4. If perfection of a security interest depends upon possession of the collateral by a secured party, perfection occurs no earlier than the time the secured party takes possession and continues only while the secured party retains possession.
  5. A security interest in a certificated security in registered form is perfected by delivery when delivery of the certificated security occurs under AS 45.08.301 and remains perfected by delivery until the debtor obtains possession of the security certificate.
  6. A person in possession of collateral is not required to acknowledge that it holds possession for a secured party’s benefit.
  7. If a person acknowledges that it holds possession for the secured party’s benefit,
    1. the acknowledgment is effective under (c) of this section or AS 45.08.301(a) , even if the acknowledgment violates the rights of a debtor; and
    2. unless the person otherwise agrees or law other than this chapter otherwise provides, the person does not owe a duty to the secured party and is not required to confirm the acknowledgment to another person.
  8. A secured party having possession of collateral does not relinquish possession by delivering the collateral to a person other than the debtor or a lessee of the collateral from the debtor in the ordinary course of the debtor’s business if the person was instructed before the delivery or is instructed contemporaneously with the delivery to
    1. hold possession of the collateral for the secured party’s benefit; or
    2. redeliver the collateral to the secured party.
  9. A secured party does not relinquish possession, even if a delivery under (h) of this section violates the rights of a debtor. A person to whom collateral is delivered under (h) of this section does not owe a duty to the secured party and is not required to confirm the delivery to another person unless the person otherwise agrees or law other than this chapter otherwise provides.

History. (§ 1 ch 113 SLA 2000; am § 59 ch 41 SLA 2009; am § 104 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to the 2009 amendment of (a) 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 first 2009 amendment, effective June 21, 2009, in (b), substituted “AS 45.29.316(d) ” for “AS 45.29.316(e) ”.

The second 2009 amendment, effective January 1, 2010, in (a), added “tangible” preceding “negotiable documents, goods, instruments, money”.

Notes to Decisions

Taking possession of collateral perfects security interest. —

Former AS 45.09.305 provided that a security interest in goods may be perfected by the secured party’s taking possession of the collateral. Blumenstein v. Phillips Ins. Ctr., 490 P.2d 1213 (Alaska 1971) (decided under former AS 45.09.305).

Sec. 45.29.314. Perfection by control.

  1. A security interest in deposit accounts, electronic chattel paper, investment property, letter-of-credit rights, or electronic documents may be perfected by control of the collateral under AS 45.07.116 , AS 45.29.104 , 45.29.105 , 45.29.106 , or 45.29.107 .
  2. A security interest in deposit accounts, electronic chattel paper, letter-of-credit rights, or electronic documents is perfected by control under AS 45.07.116 , AS 45.29.104 , 45.29.105 , or 45.29.107 when the secured party obtains control and remains perfected by control only while the secured party retains control.
  3. A security interest in investment property is perfected by control under AS 45.29.106 from the time the secured party obtains control and remains perfected by control until
    1. the secured party does not have control; and
    2. one of the following occurs:
      1. if the collateral is a certificated security, the debtor has or acquires possession of the security certificate;
      2. if the collateral is an uncertificated security, the issuer has registered or registers the debtor as the registered owner; or
      3. if the collateral is a security entitlement, the debtor is or becomes the entitlement holder.

History. (§ 1 ch 113 SLA 2000; am § 60 ch 41 SLA 2009; am §§ 105, 106 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 first 2009 amendment, effective June 21, 2009, in (a), deleted “, or” following “letter-of-credit rights,”.

The second 2009 amendment, effective January 1, 2010, in (a), deleted “or” following “investment property,” and added “AS 45.07.116 ,” following “control of the collateral under”; in (b), added “, or electronic documents” following “letter-of-credit rights”, and “AS 45.07.116 ” following “perfected by control under”; made a related stylistic change.

Sec. 45.29.315. Secured party’s rights on disposition of collateral and in proceeds.

  1. Except as otherwise provided in this chapter,
    1. a security interest or agricultural lien continues in collateral notwithstanding sale, lease, license, exchange, or other disposition of the security interest or agricultural lien unless the secured party authorized the disposition free of the security interest or agricultural lien; and
    2. a security interest attaches to any identifiable proceeds of collateral.
  2. Proceeds that are commingled with other property are identifiable proceeds if the proceeds
    1. are goods, to the extent provided by AS 45.29.336 ; and
    2. are not goods, to the extent that the secured party identifies the proceeds by a method of tracing, including application of equitable principles, that is permitted under law other than this chapter with respect to commingled property of the type involved.
  3. A security interest in proceeds is a perfected security interest if the security interest in the original collateral was perfected.
  4. A perfected security interest in proceeds becomes unperfected on the 21st day after the security interest attaches to the proceeds unless
    1. the following conditions are satisfied
      1. a filed financing statement covers the original collateral;
      2. the proceeds are collateral in which a security interest may be perfected by filing in the office in which the financing statement has been filed; and
      3. the proceeds are not acquired with cash proceeds;
    2. the proceeds are identifiable cash proceeds; or
    3. the security interest in the proceeds is perfected other than under (c) of this section when the security interest attaches to the proceeds or within 20 days thereafter.
  5. If a filed financing statement covers the original collateral, a security interest in proceeds that remains perfected under (d)(1) of this section becomes unperfected at the later of
    1. when the effectiveness of the filed financing statement lapses under AS 45.29.515 or is terminated under AS 45.29.513 ; or
    2. the 21st day after the security interest attaches to the proceeds.

History. (§ 1 ch 113 SLA 2000)

Notes to Decisions

Effect of clause giving right to proceeds. —

The right to proceeds under specific mention thereof in a security agreement or financing statement does not in itself constitute an authorization of sale. Such a provision exists merely as a precautionary measure so that should a sale occur, the creditor is expressly protected by the terms of the agreement. Northern Commer. Co. v. Cobb, 778 P.2d 205 (Alaska 1989).

Effect of absence of clause restricting sale. —

The mere absence of a restriction on sale in the security agreement does not constitute implied authorization to sell. Alaska law places no burden on a secured party to restrict resale in the security agreement. The question of implied authorization is more properly viewed as a question of fact, with absence of a restriction considered only a factor in that determination. Northern Commer. Co. v. Cobb, 778 P.2d 205 (Alaska 1989).

Collateral references. —

What constitutes secured party’s authorization to transfer collateral free of lien under UCC § 9-306(2), 37 ALR4th 787.

Sec. 45.29.316. Continued perfection of security interest following change in governing law.

  1. A security interest perfected under the law of the jurisdiction designated in AS 45.29.301 (1) or 45.29.305(c) remains perfected until the earliest of
    1. the time perfection would have ceased under the law of that jurisdiction;
    2. the expiration of four months after a change of the debtor’s location to another jurisdiction; or
    3. the expiration of one year after a transfer of collateral to a person who thereby becomes a debtor and is located in another jurisdiction.
  2. If a security interest described in (a) of this section becomes perfected under the law of the other jurisdiction before the earliest time or event described in (a) of this section, it remains perfected thereafter. If the security interest does not become perfected under the law of the other jurisdiction before the earliest time or event, it becomes unperfected and is considered never to have been perfected as against a purchaser of the collateral for value.
  3. A possessory security interest in collateral, other than goods covered by a certificate of title and as-extracted collateral consisting of goods, remains continuously perfected if
    1. the collateral is located in one jurisdiction and subject to a security interest perfected under the law of that jurisdiction;
    2. after the event described in (1) of this subsection occurs, the collateral is brought into another jurisdiction; and
    3. upon entry into the other jurisdiction, the security interest is perfected under the law of the other jurisdiction.
  4. Except as otherwise provided in (e) of this section, a security interest in goods covered by a certificate of title that is perfected by a method under the law of another jurisdiction when the goods become covered by a certificate of title from this state remains perfected until the security interest would have become unperfected under the law of the other jurisdiction had the goods not become so covered.
  5. A security interest described in (d) of this section becomes unperfected as against a purchaser of the goods for value and is considered never to have been perfected as against a purchaser of the goods for value if the applicable requirements for perfection under AS 45.29.311(b) or 45.29.313 are not satisfied before the earlier of
    1. the time the security interest would have become unperfected under the law of the other jurisdiction had the goods not become covered by a certificate of title from this state; or
    2. the expiration of four months after the goods had become so covered.
  6. A security interest in deposit accounts, letter-of-credit rights, or investment property that is perfected under the law of the bank’s jurisdiction, the issuer’s jurisdiction, a nominated person’s jurisdiction, the securities intermediary’s jurisdiction, or the commodity intermediary’s jurisdiction, as applicable, remains perfected until the earlier of
    1. the time the security interest would have become unperfected under the law of that jurisdiction; or
    2. the expiration of four months after a change of the applicable jurisdiction to another jurisdiction.
  7. If a security interest described in (f) of this section becomes perfected under the law of the other jurisdiction before the earlier of the time or the end of the period described in (f) of this section, it remains perfected thereafter. If the security interest does not become perfected under the law of the other jurisdiction before the earlier of that time or the end of that period, it becomes unperfected and is considered never to have been perfected as against a purchaser of the collateral for value.
  8. The following rules apply to collateral to which a security interest attaches within four months after the debtor changes its location to another jurisdiction:
    1. a financing statement filed before the change under the law of the jurisdiction designated in AS 45.29.301 (1) or 45.29.305(c) is effective to perfect a security interest in the collateral if the financing statement would have been effective to perfect a security interest in the collateral had the debtor not changed its location;
    2. if a security interest perfected by a financing statement that is effective under (1) of this subsection becomes perfected under the law of the other jurisdiction before the earlier of the time the financing statement would have become ineffective under the law of the jurisdiction designated in AS 45.29.301 (1) or 45.29.305(c) or the expiration of the four-month period, it remains perfected; if the security interest does not become perfected under the law of the other jurisdiction before the earlier time or event, it becomes unperfected and is considered never to have been perfected as against a purchaser of the collateral for value.
  9. If a financing statement naming an original debtor is filed under the law of the jurisdiction designated in AS 45.29.301 (1) or 45.29.305(c) and the new debtor is located in another jurisdiction, the following rules apply:
    1. the financing statement is effective to perfect a security interest in collateral acquired by the new debtor before, and within four months after, the new debtor becomes bound under AS 45.29.203(d) , if the financing statement would have been effective to perfect a security interest in the collateral had the collateral been acquired by the original debtor;
    2. a security interest perfected by the financing statement and that becomes perfected under the law of the other jurisdiction before the earlier of the time the financing statement would have become ineffective under the law of the jurisdiction designated in AS 45.29.301 (1) or 45.29.305(c) or the expiration of the four-month period remains perfected; a security interest that is perfected by the financing statement but that does not become perfected under the law of the other jurisdiction before the earlier time or event becomes unperfected and is considered never to have been perfected as against a purchaser of the collateral for value.

History. (§ 1 ch 113 SLA 2000; am § 11 ch 64 SLA 2013)

Effect of amendments. —

The 2013 amendment, effective July 1, 2013, added (h) and (i).

Sec. 45.29.317. Interests that take priority over or take free of security interest or agricultural lien.

  1. A security interest or agricultural lien is subordinate to the rights of a person
    1. entitled to priority under AS 45.29.322 ; and
    2. except as otherwise provided in (e) of this section, that becomes a lien creditor before the earlier of the time
      1. the security interest or agricultural lien is perfected; or
      2. a financing statement covering the collateral is filed.
  2. Except as otherwise provided in (e) of this section, a buyer, other than a secured party, of tangible chattel paper, tangible documents, goods, instruments, or a certificated security takes free of a security interest or agricultural lien if the buyer gives value and receives delivery of the collateral without knowledge of the security interest or agricultural lien and before it is perfected.
  3. Except as otherwise provided in (e) of this section, a lessee of goods takes free of a security interest or agricultural lien if the lessee gives value and receives delivery of the collateral without knowledge of the security interest or agricultural lien and before it is perfected.
  4. A licensee of a general intangible or a buyer, other than a secured party, of collateral other than tangible chattel paper, tangible documents, goods, instruments, or a certificated security takes free of a security interest if the licensee or buyer gives value without knowledge of the security interest and before it is perfected.
  5. Except as otherwise provided in AS 45.29.320 and 45.29.321 , if a person files a financing statement with respect to a purchase money security interest before or within 20 days after the debtor receives delivery of the collateral, the security interest takes priority over the rights of a buyer, lessee, or lien creditor that arise between the time the security interest attaches and the time of filing.

History. (§ 1 ch 113 SLA 2000; am §§ 107, 108 ch 44 SLA 2009; am §§ 12, 13 ch 64 SLA 2013)

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 “documents, goods, instruments”; in (d), added “electronic documents,” preceding “general intangibles”.

The 2013 amendment, effective July 1, 2013, in (b), substituted “or a certificated security” for “or a security certificate”; in (d), substituted “of collateral” for “of accounts, electronic chattel paper, electronic documents, general intangibles, or investment property”, and inserted “tangible chattel paper, tangible documents, goods, instruments, or” following “other than”.

Sec. 45.29.318. No interest retained in right to payment that is sold; rights and title of seller of account or chattel paper with respect to creditors and purchasers.

  1. A debtor that has sold an account, chattel paper, payment intangible, or promissory note does not retain a legal or equitable interest in the collateral sold.
  2. For purposes of determining the rights of creditors of, and purchasers for value of an account or chattel paper from, a debtor that has sold an account or chattel paper, while the buyer’s security interest is unperfected, the debtor is considered to have rights and title to the account or chattel paper identical to those the debtor sold.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.319. Rights and title of consignee with respect to creditors and purchasers.

  1. Except as otherwise provided in (b) of this section, for purposes of determining the rights of creditors of, and purchasers for value of goods from, a consignee, while the goods are in the possession of the consignee, the consignee is considered to have rights and title to the goods identical to those the consignor had or had power to transfer.
  2. For purposes of determining the rights of a creditor of a consignee, law other than this chapter determines the rights and title of a consignee while goods are in the consignee’s possession if, under AS 45.29.301 45.29.342 , a perfected security interest held by the consignor would have priority over the rights of the creditor.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.320. Buyer of goods.

  1. Except as otherwise provided in (e) of this section, a buyer in ordinary course of business, other than a person buying farm products from a person engaged in farming operations, takes free of a security interest created by the buyer’s seller, even if the security interest is perfected and the buyer knows of its existence.
  2. Except as otherwise provided in (e) of this section, a buyer of goods from a person who used or bought the goods for use primarily for personal, family, or household purposes takes free of a security interest, even if perfected, if the buyer buys
    1. without knowledge of the security interest;
    2. for value;
    3. primarily for the buyer’s personal, family, or household purposes; and
    4. before the filing of a financing statement covering the goods.
  3. To the extent that it affects the priority of a security interest over a buyer of goods under (b) of this section, the period of effectiveness of a filing made in the jurisdiction in which the seller is located is governed by AS 45.29.316(a) and (b).
  4. A buyer in ordinary course of business buying oil, gas, or other minerals at the wellhead or minehead or after extraction takes free of an interest arising out of an encumbrance.
  5. The provisions of (a) and (b) of this section do not affect a security interest in goods in the possession of the secured party under AS 45.29.313 .

History. (§ 1 ch 113 SLA 2000)

Notes to Decisions

Summary judgment. —

Summary judgment was inappropriate on the issue of whether the purchaser of a wheel loader was a buyer in the ordinary course of business, where affidavits submitted in evidence contained no specific facts that would prove or disprove that the seller was a dealer in heavy equipment. Northern Commer. Co. v. Cobb, 778 P.2d 205 (Alaska 1989) (decided under former AS 45.09.307).

Collateral references. —

Who is “person in business of selling goods of that kind” within provision of UCC § 1-201(9) defining buyer in ordinary course of business for purposes of UCC § 9-307(1), 73 ALR3d 338.

Construction of UCC § 9-307(3) providing that under certain conditions a buyer, other than a buyer in the ordinary course of business, takes free of a security interest securing “future advances”, 35 ALR4th 390.

Construction and effect of future advances clauses under UCC Article 9, 90 ALR4th 859.

Sec. 45.29.321. Licensee of general intangible and lessee of goods in ordinary course of business.

  1. In this section, “licensee in ordinary course of business” means a person who becomes a licensee of a general intangible in good faith, without knowledge that the license violates the rights of another person in the general intangible, and in the ordinary course from a person in the business of licensing general intangibles of that kind. A person becomes a licensee in the ordinary course if the license to the person comports with the usual or customary practices in the kind of business in which the licensor is engaged or with the licensor’s own usual or customary practices.
  2. A licensee in ordinary course of business takes its rights under a nonexclusive license free of a security interest in the general intangible created by the licensor even if the security interest is perfected and the licensee knows of its existence.
  3. A lessee in ordinary course of business takes its leasehold interest free of a security interest in the goods created by the lessor even if the security interest is perfected and the lessee knows of its existence.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.322. Priorities among conflicting security interests in and agricultural liens on same collateral.

  1. Except as otherwise provided in this section, priority among conflicting security interests and agricultural liens in the same collateral is determined according to the following rules:
    1. conflicting perfected security interests and agricultural liens rank according to priority in time of filing or perfection; priority dates from the earlier of the time a filing covering the collateral is first made or the security interest or agricultural lien is first perfected if there is no period thereafter when there is neither filing nor perfection;
    2. a perfected security interest or agricultural lien has priority over a conflicting unperfected security interest or agricultural lien;
    3. the first security interest or agricultural lien to attach or become effective has priority if conflicting security interests and agricultural liens are unperfected.
  2. For the purposes of (a)(1) of this section, the time of filing or perfection as to a security interest in collateral
    1. is also the time of filing or perfection as to a security interest in proceeds; and
    2. supported by a supporting obligation is also the time of filing or perfection as to a security interest in the supporting obligation.
  3. Except as otherwise provided in (f) of this section, a security interest in collateral that qualifies for priority over a conflicting security interest under AS 45.29.327 , 45.29.328 , 45.29.329 , 45.29.330 , or 45.29.331 also has priority over a conflicting security interest in
    1. supporting obligation for the collateral; and
    2. proceeds of the collateral if
      1. the security interest in proceeds is perfected;
      2. the proceeds are cash proceeds or of the same type as the collateral; and
      3. in the case of proceeds that are proceeds of proceeds, all intervening proceeds are cash proceeds, proceeds of the same type as the collateral, or an account relating to the collateral.
  4. Subject to (e) of this section and except as otherwise provided in (f) of this section, if a security interest in chattel paper, deposit accounts, negotiable documents, instruments, investment property, or letter-of-credit rights is perfected by a method other than filing, conflicting perfected security interests in proceeds of the collateral rank according to priority in time of filing.
  5. The provisions of (d) of this section apply only if the proceeds of the collateral are not cash proceeds, chattel paper, negotiable documents, instruments, investment property, or letter-of-credit rights.
  6. The provisions of (a) — (e) of this section are subject to
    1. the provisions of (g) of this section and the other provisions of AS 45.29.301 45.29.342 ;
    2. AS 45.04.210 with respect to a security interest of a collecting bank;
    3. AS 45.05.118 with respect to a security interest of an issuer or nominated person; and
    4. AS 45.29.110 with respect to a security interest arising under AS 45.02 or AS 45.12.
  7. A perfected agricultural lien on collateral has priority over a conflicting security interest in or agricultural lien on the same collateral if the statute creating the agricultural lien so provides.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.323. Future advances.

  1. Except as otherwise provided in (c) of this section, for purposes of determining the priority of a perfected security interest under AS 45.29.322(a)(1) , perfection of the security interest dates from the time an advance is made to the extent that the security interest secures an advance that
    1. is made while the security interest is perfected only
      1. under AS 45.29.309 when it attaches; or
      2. temporarily under AS 45.29.312(e) , (f), or (g); and
    2. not made pursuant to a commitment entered into before or while the security interest is perfected by a method other than under AS 45.29.309 or 45.29.312(e) , (f), or (g).
  2. Except as otherwise provided in (c) of this section, a security interest is subordinate to the rights of a person who becomes a lien creditor to the extent that the security interest secures an advance made more than 45 days after the person becomes a lien creditor unless the advance is made
    1. without knowledge of the lien; or
    2. pursuant to a commitment entered into without knowledge of the lien.
  3. The provisions of (a) and (b) of this section do not apply to a security interest held by a secured party that is a buyer of accounts, chattel paper, payment intangibles, or promissory notes or a consignor.
  4. Except as otherwise provided in (e) of this section, a buyer of goods other than a buyer in ordinary course of business takes free of a security interest to the extent that it secures advances made after the earlier of
    1. the time the secured party acquires knowledge of the buyer’s purchase; or
    2. 45 days after the purchase.
  5. The provisions of (d) of this section do not apply if the advance is made pursuant to a commitment entered into without knowledge of the buyer’s purchase and before the expiration of the 45-day period.
  6. Except as otherwise provided in (g) of this section, a lessee of goods, other than a lessee in ordinary course of business, takes the leasehold interest free of a security interest to the extent that it secures advances made after the earlier of
    1. the time the secured party acquires knowledge of the lease; or
    2. 45 days after the lease contract becomes enforceable.
  7. The provisions of (f) of this section do not apply if the advance is made pursuant to a commitment entered into without knowledge of the lease and before the expiration of the 45-day period.

History. (§ 1 ch 113 SLA 2000)

Collateral references. —

Construction and effect of future advances clauses under UCC Article 9, 90 ALR4th 859.

Sec. 45.29.324. Priority of purchase money security interests.

  1. Except as otherwise provided in (g) of this section, a perfected purchase money security interest in goods other than inventory or livestock has priority over a conflicting security interest in the same goods, and, except as otherwise provided in AS 45.29.327 , a perfected security interest in its identifiable proceeds also has priority if the purchase money security interest is perfected when the debtor receives possession of the collateral or within 20 days thereafter.
  2. Subject to (c) of this section and except as otherwise provided in (g) of this section, a perfected purchase money security interest in inventory has priority over a conflicting security interest in the same inventory, has priority over a conflicting security interest in chattel paper or an instrument constituting proceeds of the inventory and in proceeds of the chattel paper if so provided in AS 45.29.330 , and, except as otherwise provided in AS 45.29.327 , also has priority in identifiable cash proceeds of the inventory to the extent the identifiable cash proceeds are received on or before the delivery of the inventory to a buyer if
    1. the purchase money security interest is perfected when the debtor receives possession of the inventory;
    2. the purchase money secured party sends an authenticated notification to the holder of the conflicting security interest;
    3. the holder of the conflicting security interest receives the notification within five years before the debtor receives possession of the inventory; and
    4. the notification states that the person sending the notification has or expects to acquire a purchase money security interest in inventory of the debtor and describes the inventory.
  3. The provisions of (b)(2) — (4) of this section apply only if the holder of the conflicting security interest had filed a financing statement covering the same types of inventory if the purchase money security interest is
    1. perfected by filing, before the date of the filing; or
    2. temporarily perfected without filing or possession under AS 45.29.312(f) before the beginning of the 20-day period under AS 45.29.312(f) .
  4. Subject to (e) of this section and except as otherwise provided in (g) of this section, a perfected purchase money security interest in livestock that are farm products has priority over a conflicting security interest in the same livestock, and, except as otherwise provided in AS 45.29.327 , a perfected security interest in their identifiable proceeds and identifiable products in their unmanufactured states also has priority if
    1. the purchase money security interest is perfected when the debtor receives possession of the livestock;
    2. the purchase money secured party sends an authenticated notification to the holder of the conflicting security interest;
    3. the holder of the conflicting security interest receives the notification within six months before the debtor receives possession of the livestock; and
    4. the notification states that the person sending the notification has or expects to acquire a purchase money security interest in livestock of the debtor and describes the livestock.
  5. The provisions of (d)(2) — (4) of this section apply only if the holder of the conflicting security interest had filed a financing statement covering the same types of livestock if the purchase money security interest is
    1. perfected by filing before the date of the filing; or
    2. temporarily perfected without filing or possession under AS 45.29.312(f) before the beginning of the 20-day period under AS 45.29.312(f) .
  6. Except as otherwise provided in (g) of this section, a perfected purchase-money security interest in software has priority over a conflicting security interest in the same collateral, and, except as otherwise provided in AS 45.29.327 , a perfected security interest in its identifiable proceeds also has priority to the extent that the purchase money security interest in the goods in which the software was acquired for use has priority in the goods and proceeds of the goods under this section.
  7. If more than one security interest qualifies for priority in the same collateral under (a), (b), (d), or (f) of this section,
    1. a security interest securing an obligation incurred as all or part of the price of the collateral has priority over a security interest securing an obligation incurred for value given to enable the debtor to acquire rights in or the use of collateral; and
    2. in all other cases, AS 45.29.322(a) applies to the qualifying security interests.

History. (§ 1 ch 113 SLA 2000)

Notes to Decisions

“Debtor”. —

The term “debtor” as it is used in former AS 45.09.312, means the person who owes payment or other performance of the obligation secured. Brodie Hotel Supply, Inc. v. United States, 431 F.2d 1316 (9th Cir. Alaska 1970) (decided under former AS 45.09.312).

In former AS 45.09.312(d), the term “debtor” is given the meaning ascribed to it in former AS 45.09.105(a)(4) (formerly AS 45.05.698(a)(4)). Brodie Hotel Supply, Inc. v. United States, 431 F.2d 1316 (9th Cir. Alaska 1970) (decided under former AS 45.09.312).

Holders of purchase-money security interest in noninventory collateral. The holder of such an interest need not follow the notice procedures prescribed for the holders of purchase-money interests in inventory. Such a holder is also given a special priority position. His interest, perfected second but within the ten-day grace period, will prevail over any previously perfected security interest. This priority exists even though the framers of the code knew that the holder of the conflicting security interest would be relying on the possession of the collateral and upon the absence of a prior filing. Brodie Hotel Supply, Inc. v. United States, 431 F.2d 1316 (9th Cir. Alaska 1970) (decided under former AS 45.09.312).

The holder of a purchase-money security interest in noninventory collateral will have priority over a previously perfected security interest which includes the collateral by virtue of an after-acquired property clause. Such a holder therefore is not required to search the files to determine the existence of such a conflicting interest in order to be sure of his priority. Brodie Hotel Supply, Inc. v. United States, 431 F.2d 1316 (9th Cir. Alaska 1970) (decided under former AS 45.09.312).

Failure to file a financing statement before the security interest attached, under (former) AS 45.09.402, did not deprive the holder of a purchase-money interest in noninventory collateral of the favored status given by this section, where the other secured creditor could have protected itself by inquiring into the debtor’s interest in the collateral before accepting his chattel mortgage. Brodie Hotel Supply, Inc. v. United States, 431 F.2d 1316 (9th Cir. Alaska 1970) (decided under former AS 45.09.312).

Sec. 45.29.325. Priority of security interests in transferred collateral.

  1. Except as otherwise provided in (b) of this section, a security interest created by a debtor is subordinate to a security interest in the same collateral created by another person if
    1. the debtor acquired the collateral subject to the security interest created by the other person;
    2. the security interest created by the other person was perfected when the debtor acquired the collateral; and
    3. there is no period after the events described in (1) and (2) of this subsection when the security interest is unperfected.
  2. The provisions of (a) of this section subordinate a security interest only if the security interest
    1. otherwise would have priority solely under AS 45.29.322(a) or 45.29.324 ; or
    2. arose solely under AS 45.02.711(c) or AS 45.12.508(e) .

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.326. Priority of security interests created by new debtor.

  1. Subject to (b) of this section, a security interest that is created by a new debtor in collateral in which the new debtor has or acquires rights and that is perfected solely by a filed financing statement that would be ineffective to perfect the security interest but for the application of AS 45.29.316(i)(1) or 45.29.508 is subordinate to a security interest in the same collateral that is perfected other than by a financing statement described in this subsection.
  2. The other provisions of AS 45.29.301 45.29.342 determine the priority among conflicting security interests in the same collateral perfected by filed financing statements described in (a) of this section. However, if the security agreements to which a new debtor became bound as debtor were not entered into by the same original debtor, the conflicting security interests rank according to priority in time of the new debtor’s having become bound.

History. (§ 1 ch 113 SLA 2000; am § 14 ch 64 SLA 2013)

Effect of amendments. —

The 2013 amendment, effective July 1, 2013, in (a), inserted “in collateral in which the new debtor has or acquires rights and” following “created by a new debtor”, inserted “solely” following “perfected”, substituted “that would be ineffective to perfect the security interest but for the application of AS 45.29.316(i)(1) or 45.29.508 ” for “that is effective solely under AS 45.29.508 in collateral in which a new debtor has or acquires rights” and “described in this subsection” for “that is effective solely under AS 45.29.508”, made a stylistic change; in the first sentence of (b), substituted “described in (a) of this section” for “that are effective solely under AS 45.29.508”.

Sec. 45.29.327. Priority of security interests in deposit account.

The following rules govern priority among conflicting security interests in the same deposit account:

  1. a security interest held by a secured party having control of the deposit account under AS 45.29.104 has priority over a conflicting security interest held by a secured party that does not have control;
  2. except as otherwise provided in (3) and (4) of this section, security interests perfected by control under AS 45.29.314 rank according to priority in time of obtaining control;
  3. except as otherwise provided in (4) of this section, a security interest held by the bank with which the deposit account is maintained has priority over a conflicting security interest held by another secured party;
  4. a security interest perfected by control under AS 45.29.104(a)(3) has priority over a security interest held by the bank with which the deposit account is maintained.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.328. Priority of security interests in investment property.

The following rules govern priority among conflicting security interests in the same investment property:

  1. a security interest held by a secured party having control of investment property under AS 45.29.106 has priority over a security interest held by a secured party that does not have control of the investment property;
  2. except as otherwise provided in (3) and (4) of this section, conflicting security interests held by secured parties each of which has control under AS 45.29.106 rank according to priority in time, if the collateral is
    1. a security, of obtaining control;
    2. a security entitlement carried in a securities account and if the secured party obtained control
      1. under AS 45.08.106(d)(1) , of the secured party’s becoming the person for which the securities account is maintained;
      2. under AS 45.08.106(d)(2) , of the securities intermediary’s agreement to comply with the secured party’s entitlement orders with respect to security entitlements carried or to be carried in the securities account; or
      3. through another person under AS 45.08.106(d)(3) , of the time on which priority would be based under this paragraph if the other person were the secured party; or
    3. a commodity contract carried with a commodity intermediary, of the satisfaction of the requirement for control specified in AS 45.29.106 (b)(2) with respect to commodity contracts carried or to be carried with the commodity intermediary;
  3. a security interest held by a securities intermediary in a security entitlement or a securities account maintained with the securities intermediary has priority over a conflicting security interest held by another secured party;
  4. a security interest held by a commodity intermediary in a commodity contract or a commodity account maintained with the commodity intermediary has priority over a conflicting security interest held by another secured party;
  5. a security interest in a certificated security in registered form that is perfected by taking delivery under AS 45.29.313(a) and not by control under AS 45.29.314 has priority over a conflicting security interest perfected by a method other than control;
  6. conflicting security interests created by a broker, securities intermediary, or commodity intermediary that are perfected without control under AS 45.29.106 rank equally;
  7. in all other cases, priority among conflicting security interests in investment property is governed by AS 45.29.322 and 45.29.323 .

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.329. Priority of security interests in letter-of-credit right.

The following rules govern priority among conflicting security interests in the same letter-of-credit right:

  1. a security interest held by a secured party having control of the letter-of-credit right under AS 45.29.107 has priority to the extent of its control over a conflicting security interest held by a secured party that does not have control;
  2. security interests perfected by control under AS 45.29.314 rank according to priority in time of obtaining control.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.330. Priority of purchaser of chattel paper or instrument.

  1. A purchaser of chattel paper has priority over a security interest in the chattel paper that is claimed merely as proceeds of inventory subject to a security interest if
    1. in good faith and in the ordinary course of the purchaser’s business, the purchaser gives new value and takes possession of the chattel paper or obtains control of the chattel paper under AS 45.29.105 ; and
    2. the chattel paper does not indicate that it has been assigned to an identified assignee other than the purchaser.
  2. A purchaser of chattel paper has priority over a security interest in the chattel paper that is claimed other than merely as proceeds of inventory subject to a security interest if the purchaser gives new value and takes possession of the chattel paper or obtains control of the chattel paper under AS 45.29.105 in good faith, in the ordinary course of the purchaser’s business, and without knowledge that the purchase violates the rights of the secured party.
  3. Except as otherwise provided in AS 45.29.327 , a purchaser having priority in chattel paper under (a) or (b) of this section also has priority in proceeds of the chattel paper to the extent that
    1. AS 45.29.322 provides for priority in the proceeds; or
    2. the proceeds consist of the specific goods covered by the chattel paper or cash proceeds of the specific goods even if the purchaser’s security interest in the proceeds is unperfected.
  4. Except as otherwise provided in AS 45.29.331(a) , a purchaser of an instrument has priority over a security interest in the instrument perfected by a method other than possession if the purchaser gives value and takes possession of the instrument in good faith and without knowledge that the purchase violates the rights of the secured party.
  5. For purposes of (a) and (b) of this section, the holder of a purchase money security interest in inventory gives new value for chattel paper constituting proceeds of the inventory.
  6. For purposes of (b) and (d) of this section, if chattel paper or an instrument indicates that it has been assigned to an identified secured party other than the purchaser, a purchaser of the chattel paper or instrument has knowledge that the purchase violates the rights of the secured party.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.331. Priority of rights of purchasers of instruments, documents, and securities under other chapters; priority of interests in financial assets and security entitlements under AS 45.08.

  1. This chapter does not limit the rights of a holder in due course of a negotiable instrument, a holder to which a negotiable document of title has been duly negotiated, or a protected purchaser of a security. These holders or purchasers take priority over an earlier security interest, even if perfected, to the extent provided in AS 45.03, AS 45.07, and AS 45.08.
  2. This chapter does not limit the rights of or impose liability on a person to the extent that the person is protected against the assertion of a claim under AS 45.08.
  3. Filing under this chapter does not constitute notice of a claim or defense to the holders, purchasers, or persons described in (a) and (b) of this section.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.332. Transfer of money; transfer of funds from deposit account.

  1. A transferee of money takes the money free of a security interest unless the transferee acts in collusion with the debtor in violating the rights of the secured party.
  2. A transferee of funds from a deposit account takes the funds free of a security interest in the deposit account unless the transferee acts in collusion with the debtor in violating the rights of the secured party.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.333. Priority of certain liens arising by operation of law.

  1. In this section, “possessory lien” means an interest, other than a security interest or an agricultural lien,
    1. that secures payment or performance of an obligation for services or materials furnished with respect to goods by a person in the ordinary course of the person’s business;
    2. that is created by statute or rule of law in favor of the person; and
    3. whose effectiveness depends on the person’s possession of the goods.
  2. A possessory lien on goods has priority over a security interest in the goods unless the lien is created by a statute that expressly provides otherwise.

History. (§ 1 ch 113 SLA 2000)

Notes to Decisions

The priority given to a mechanic’s or artisan’s lien by former AS 45.09.310 (see now this section) is controlling. Decker v. Aurora Motors, 409 P.2d 603 (Alaska 1966) (decided under former AS 45.09.310).

Priorities under AS 34.35.200 (2) and former AS 28.10.510 unaffected. —

Nothing contained in the Uniform Commercial Code alters priorities under AS 34.35.200 (2) and former AS 28.10.510 (see now AS 28.10.391 ). Decker v. Aurora Motors, 409 P.2d 603 (Alaska 1966) (decided under former AS 45.09.310).

AS 34.35.200 (2) expressly subordinates a mechanic’s lien to a prior recorded (perfected) security interest under former AS 28.10.510 (see now AS 28.10.391 ) and therefore the priority given to a mechanic’s lien by former AS 45.09.310 is not applicable. Decker v. Aurora Motors, 409 P.2d 603 (Alaska 1966) (decided under former AS 45.09.310).

A motor vehicle dealer’s interest under a retail installment contract was a “security interest.” Decker v. Aurora Motors, 409 P.2d 603 (Alaska 1966) (decided under former AS 45.09.310).

Collateral references. —

Priorities as between previously perfected security interest and repairman’s lien on motor vehicle under Uniform Commercial Code, 69 ALR3d 1162.

Sec. 45.29.334. Priority of security interests in fixtures and crops.

  1. A security interest under this chapter may be created in goods that are fixtures or may continue in goods that become fixtures. A security interest does not exist under this chapter in ordinary building materials incorporated into an improvement on land.
  2. This chapter does not prevent creation of an encumbrance upon fixtures under real property law.
  3. In cases not governed by (d) — (h) of this section, a security interest in fixtures is subordinate to a conflicting interest of an encumbrancer or owner of the related real property other than the debtor.
  4. Except as otherwise provided in (h) of this section, a perfected security interest in fixtures has priority over a conflicting interest of an encumbrancer or owner of the real property if the debtor has an interest of record in or is in possession of the real property and
    1. the security interest is a purchase money security interest;
    2. the interest of the encumbrancer or owner arises before the goods become fixtures; and
    3. the security interest is perfected by a fixture filing before the goods become fixtures or within 20 days after the goods become fixtures.
  5. A perfected security interest in fixtures has priority over a conflicting interest of an encumbrancer or owner of the real property if
    1. the debtor has an interest of record in the real property or is in possession of the real property and the security interest
      1. is perfected by a fixture filing before the interest of the encumbrancer or owner is of record; and
      2. has priority over any conflicting interest of a predecessor in title of the encumbrancer or owner;
    2. before the goods become fixtures, the security interest is perfected by a method permitted by this chapter and the fixtures are readily removable
      1. factory or office machines;
      2. equipment that is not primarily used or leased for use in the operation of the real property; or
      3. replacements of domestic appliances that are consumer goods;
    3. the conflicting interest is a lien on the real property obtained by legal or equitable proceedings after the security interest was perfected by a method permitted by this chapter; or
    4. the security interest is
      1. created in a manufactured home in a manufactured home transaction; and
      2. perfected under a statute described in AS 45.29.311(a)(2) .
  6. A security interest in fixtures, whether or not perfected, has priority over a conflicting interest of an encumbrancer or owner of the real property if
    1. the encumbrancer or owner has, in an authenticated record, consented to the security interest or disclaimed an interest in the goods as fixtures; or
    2. the debtor has a right to remove the goods as against the encumbrancer or owner.
  7. The priority of the security interest under (f)(2) of this section continues for a reasonable time if the debtor’s right to remove the goods as against the encumbrancer or owner terminates.
  8. A mortgage is a construction mortgage to the extent that it secures an obligation incurred for the construction of an improvement on land, including the acquisition cost of the land if a recorded mortgage so indicates. Except as otherwise provided in (e) and (f) of this section, a security interest in fixtures is subordinate to a construction mortgage if the mortgage is recorded before the goods become fixtures and the goods become fixtures before the completion of the construction. A mortgage has this priority to the same extent as a construction mortgage to the extent that it is given to refinance a construction mortgage.
  9. A perfected security interest in crops growing on real property has priority over a conflicting interest of an encumbrancer or owner of the real property if the debtor has an interest of record in or is in possession of the real property.
  10. The provisions of (i) of this section prevail over an inconsistent statute unless that statute contains an exemption that refers specifically to this section.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.335. Accessions.

  1. A security interest may be created in an accession and continues in collateral that becomes an accession.
  2. If a security interest is perfected when the collateral becomes an accession, the security interest remains perfected in the collateral.
  3. Except as otherwise provided in (d) of this section, the other provisions of AS 45.29.301 45.29.342 determine the priority of a security interest in an accession.
  4. A security interest in an accession is subordinate to a security interest in the whole that is perfected by compliance with the requirements of a certificate of title statute under AS 45.29.311(b) .
  5. After default, subject to AS 45.29.601 45.29.628 , a secured party may remove an accession from other goods if the security interest in the accession has priority over the claims of every person having an interest in the whole.
  6. A secured party that removes an accession from other goods under (e) of this section shall promptly reimburse any holder of a security interest or other lien on, or owner of, the whole or of the other goods, other than the debtor, for the cost of repair of a physical injury to the whole or the other goods. The secured party need not reimburse the holder or owner for any diminution in value of the whole or the other goods caused by the absence of the accession removed or by any necessity for replacing it. A person entitled to reimbursement may refuse permission to remove until the secured party gives adequate assurance for the performance of the obligation to reimburse.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.336. Commingled goods.

  1. In this section, “commingled goods” means goods that are physically united with other goods in a manner so that their identity is lost in a product or mass.
  2. A security interest does not exist in commingled goods as such. However, a security interest may attach to a product or mass that results when goods become commingled goods.
  3. If collateral becomes commingled goods, a security interest attaches to the product or mass.
  4. If a security interest in collateral is perfected before the collateral becomes commingled goods, the security interest that attaches to the product or mass under (c) of this section is perfected.
  5. Except as otherwise provided in (f) of this section, the other provisions of AS 45.29.301 45.29.342 determine the priority of a security interest that attaches to the product or mass under (c) of this section.
  6. If more than one security interest attaches to the product or mass under (c) of this section, the following rules determine priority:
    1. a security interest that is perfected under (d) of this section has priority over a security interest that is unperfected at the time the collateral becomes commingled goods;
    2. if more than one security interest is perfected under (d) of this section, the security interests rank equally in proportion to the value of the collateral at the time it became commingled goods.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.337. Priority of security interests in goods covered by certificate of title.

If, while a security interest in goods is perfected by a method under the law of another jurisdiction, this state issues a certificate of title that does not show that the goods are subject to the security interest or contain a statement that the goods may be subject to security interests not shown on the certificate,

  1. a buyer of the goods, other than a person in the business of selling goods of that kind, takes free of the security interest if the buyer gives value and receives delivery of the goods after issuance of the certificate and without knowledge of the security interest; and
  2. the security interest is subordinate to a conflicting security interest in the goods that attaches, and is perfected under AS 45.29.311(b) after issuance of the certificate and without the conflicting secured party’s knowledge of the security interest.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.338. Priority of security interest or agricultural lien perfected by filed financing statement providing certain incorrect information.

If a security interest or agricultural lien is perfected by a filed financing statement providing information described in AS 45.29.516(b)(5) that is incorrect at the time the financing statement is filed,

  1. the security interest or agricultural lien is subordinate to a conflicting perfected security interest in the collateral to the extent that the holder of the conflicting security interest gives value in reasonable reliance upon the incorrect information; and
  2. a purchaser, other than a secured party, of the collateral takes free of the security interest or agricultural lien to the extent that, in reasonable reliance upon the incorrect information, the purchaser gives value and, in the case of tangible chattel paper, tangible documents, goods, instruments, or a security certificate, receives delivery of the collateral.

History. (§ 1 ch 113 SLA 2000; am § 109 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 (2), added “tangible” preceding “chattel paper,” and preceding “documents, goods, instruments”.

Sec. 45.29.339. Priority subject to subordination.

This chapter does not preclude subordination by agreement by a person entitled to priority.

History. (§ 1 ch 113 SLA 2000)

Notes to Decisions

Subordination by implication precluded. —

Former AS 45.09.316, when read in conjunction with former AS 28.10.510 (see now AS 28.10.391 ) and AS 34.35.200 (2), precludes finding subordination by implication. Decker v. Aurora Motors, 409 P.2d 603 (Alaska 1966) (decided under former AS 45.09.316).

Sec. 45.29.340. Effectiveness of right of recoupment or setoff against deposit account.

  1. Except as otherwise provided in (c) of this section, a bank with which a deposit account is maintained may exercise a right of recoupment or setoff against a secured party that holds a security interest in the deposit account.
  2. Except as otherwise provided in (c) of this section, the application of this chapter to a security interest in a deposit account does not affect a right of recoupment or setoff of the secured party as to a deposit account maintained with the secured party.
  3. The exercise by a bank of a setoff against a deposit account is ineffective against a secured party that holds a security interest in the deposit account that is perfected by control under AS 45.29.104(a)(3) if the setoff is based on a claim against the debtor.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.341. Bank’s rights and duties with respect to deposit account.

Except as otherwise provided in AS 45.29.340(c) , and unless the bank otherwise agrees in an authenticated record, a bank’s rights and duties with respect to a deposit account maintained with the bank are not terminated, suspended, or modified by

  1. the creation, attachment, or perfection of a security interest in the deposit account;
  2. the bank’s knowledge of the security interest; or
  3. the bank’s receipt of instructions from the secured party.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.342. Bank’s right to refuse to enter into or disclose existence of control agreement.

This chapter does not require a bank to enter into an agreement of the kind described in AS 45.29.104(a)(2) , even if its customer so requests or directs. A bank that has entered into such an agreement is not required to confirm the existence of the agreement to another person unless requested to do so by its customer.

History. (§ 1 ch 113 SLA 2000)

Article 4. Rights of Third Parties.

Sec. 45.29.401. Alienability of debtor’s rights.

  1. Except as otherwise provided in (b) of this section and AS 45.29.406 45.29.409 , whether a debtor’s rights in collateral may be voluntarily or involuntarily transferred is governed by law other than this chapter.
  2. An agreement between the debtor and secured party that prohibits a transfer of the debtor’s rights in collateral or makes the transfer a default does not prevent the transfer from taking effect.

History. (§ 1 ch 113 SLA 2000)

Notes to Decisions

Superiority of perfected interest. —

Trial court erred in granting unsecured creditor $23,450 from bond posted by secured creditor where the latter’s perfected security interest in lumber company’s inventory and any proceeds from the sale thereof was clearly entitled to priority over unsecured creditor’s right to subsequently attach the lumber. Security Pac. Bank, N.A. v. Haines Terminal & Highway Co., 869 P.2d 156 (Alaska 1994) (decided under former AS 45.09.311).

Collateral references. —

Construction and effect of UCC § 9-311 giving debtor right to transfer his interest in collateral, 45 ALR4th 411.

Sec. 45.29.402. Secured party not obligated on contract of debtor or in tort.

The existence of a security interest, agricultural lien, or authority given to a debtor to dispose of or use collateral, without more, does not subject a secured party to liability in contract or tort for the debtor’s acts or omissions.

History. (§ 1 ch 113 SLA 2000)

Notes to Decisions

Failure to obtain insurance. —

In a personal injury suit filed by a passenger against the lienholder of an underinsured vehicle, the lienholder successfully argued that its involvement with the car as lender and lienholder was not a sufficient basis by law to establish liability. Summary judgment for the lienholder was proper because there was no written agreement that the lienholder would provide liability insurance, nor was there any insurance policy from which third-party rights could be extrapolated. Charles v. Stout, 308 P.3d 1138 (Alaska 2013).

Sec. 45.29.403. Agreement not to assert defenses against assignee.

  1. In this section, the issue of whether an assignment is taken for value is governed by the provisions of AS 45.03.303(a) .
  2. Except as otherwise provided in this section, an agreement between an account debtor and an assignor not to assert against an assignee a claim or defense that the account debtor may have against the assignor is enforceable by an assignee that takes an assignment
    1. for value;
    2. in good faith;
    3. without notice of a claim of a property or possessory right to the property assigned; and
    4. without notice of a defense or claim in recoupment of the type that may be asserted against a person entitled to enforce a negotiable instrument under AS 45.03.305(a) .
  3. The provisions of (b) of this section do not apply to defenses of a type that may be asserted against a holder in due course of a negotiable instrument under AS 45.03.305(b) .
  4. In a consumer transaction, if a record evidences the account debtor’s obligation, if law other than this chapter requires that the record include a statement to the effect that the rights of an assignee are subject to claims or defenses that the account debtor could assert against the original obligee, and if the record does not include the statement,
    1. the record has the same effect as if the record included the statement; and
    2. the account debtor may assert against an assignee the claims and defenses that would have been available if the record included the statement.
  5. This section is subject to law other than this chapter that establishes a different rule for an account debtor who is an individual and who incurred the obligation primarily for personal, family, or household purposes.
  6. Except as otherwise provided in (d) of this section, this section does not displace law other than this chapter that gives effect to an agreement by an account debtor not to assert a claim or defense against an assignee.

History. (§ 1 ch 113 SLA 2000)

Collateral references. —

Validity, in contract for installment sale of consumer goods, or commercial paper given in connection therewith, of provision waiving, as against assignee, defenses good against seller, 39 ALR3d 518.

Sec. 45.29.404. Rights acquired by assignee; claims and defenses against assignee.

  1. Unless an account debtor has made an enforceable agreement not to assert defenses or claims, and subject to (b) — (e) of this section, the rights of an assignee are subject to
    1. all terms of the agreement between the account debtor and assignor and a defense or claim in recoupment arising from the transaction that gave rise to the contract; and
    2. any other defense or claim of the account debtor against the assignor that accrues before the account debtor receives a notification of the assignment authenticated by the assignor or the assignee.
  2. Subject to (c) of this section and except as otherwise provided in (d) of this section, the claim of an account debtor against an assignor may be asserted against an assignee under (a) of this section only to reduce the amount the account debtor owes.
  3. This section is subject to law other than this chapter that establishes a different rule for an account debtor who is an individual and who incurred the obligation primarily for personal, family, or household purposes.
  4. In a consumer transaction, if a record evidences the account debtor’s obligation, law other than this chapter requires that the record include a statement to the effect that the account debtor’s recovery against an assignee with respect to claims and defenses against the assignor may not exceed amounts paid by the account debtor under the record, and the record does not include the statement, the extent to which a claim of an account debtor against the assignor may be asserted against an assignee is determined as if the record included the statement.
  5. This section does not apply to an assignment of a health care insurance receivable.

History. (§ 1 ch 113 SLA 2000)

Notes to Decisions

Superiority of perfected interest. —

Trial court erred in granting unsecured creditor $23,450 from bond posted by secured creditor where the latter’s perfected security interest in lumber company’s inventory and any proceeds from the sale thereof was clearly entitled to priority over unsecured creditor’s right to subsequently attach the lumber. Security Pac. Bank, N.A. v. Haines Terminal & Highway Co., 869 P.2d 156 (Alaska 1994) (decided under former AS 45.09.318).

Sec. 45.29.405. Modification of assigned contract.

  1. A modification of or substitution for an assigned contract is effective against an assignee if made in good faith. The assignee acquires corresponding rights under the modified or substituted contract. The assignment may provide that the modification or substitution is a breach of contract by the assignor. This subsection is subject to (b) — (d) of this section.
  2. The provisions of (a) of this section apply to the extent that the right to payment or the right to partial payment
    1. under an assigned contract has not been fully earned by performance; or
    2. has been fully earned by performance and the account debtor has not received notification of the assignment under AS 45.29.406(a) .
  3. This section is subject to law other than this chapter that establishes a different rule for an account debtor who is an individual and who incurred the obligation primarily for personal, family, or household purposes.
  4. This section does not apply to an assignment of a health care insurance receivable.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.406. Discharge of account debtor; notification of assignment; identification and proof of assignment; restrictions on assignment of accounts, chattel paper, payment intangibles, and promissory notes ineffective.

  1. Subject to (b) — (i) of this section, an account debtor on an account, chattel paper, or a payment intangible may discharge its obligation by paying the assignor until, but not after, the account debtor receives a notification, authenticated by the assignor or the assignee, that the amount due or to become due has been assigned and that payment is to be made to the assignee. After receipt of the notification, the account debtor may discharge its obligation by paying the assignee and may not discharge its obligation by paying the assignor.
  2. Subject to (h) of this section, notification is ineffective under (a) of this section
    1. if it does not reasonably identify the rights assigned;
    2. to the extent that an agreement between an account debtor and a seller of a payment intangible limits the account debtor’s duty to pay a person other than the seller and the limitation is effective under law other than this chapter; or
    3. at the option of an account debtor, if the notification notifies the account debtor to make less than the full amount of any installment or other periodic payment to the assignee even if
      1. only a portion of the account, chattel paper, or payment intangible has been assigned to that assignee;
      2. a portion has been assigned to another assignee; or
      3. the account debtor knows that the assignment to that assignee is limited.
  3. Subject to (h) of this section, if requested by the account debtor, an assignee shall seasonably furnish reasonable proof that the assignment has been made. Unless the assignee complies, the account debtor may discharge its obligation by paying the assignor even if the account debtor has received a notification under (a) of this section.
  4. Except as otherwise provided in (e) of this section, AS 45.29.407 , and AS 45.12.303 , and subject to (h) of this section, a term in an agreement between an account debtor and an assignor or in a promissory note is ineffective to the extent that it
    1. prohibits, restricts, or requires the consent of the account debtor or person obligated on the promissory note to the assignment or transfer of, or the creation, attachment, perfection, or enforcement of a security interest in, the account, chattel paper, payment intangible, or promissory note; or
    2. provides that the assignment, transfer, creation, attachment, perfection, or enforcement of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the account, chattel paper, payment intangible, or promissory note.
  5. The provisions of (d) of this section do not apply to the sale of a payment intangible or promissory note, other than a sale under a disposition under AS 45.29.610 or an acceptance of collateral under AS 45.29.620 .
  6. Except as otherwise provided in AS 45.12.303 and AS 45.29.407 , and subject to (h) and (i) of this section, a rule of law, statute, or regulation that prohibits, restricts, or requires the consent of a government, a governmental body or official, or an account debtor to the assignment or transfer of, or creation of a security interest in, an account or chattel paper is ineffective to the extent that the rule of law, statute, or regulation
    1. prohibits, restricts, or requires the consent of the government, governmental body or official, or account debtor to the assignment or transfer of, or the creation, attachment, perfection, or enforcement of a security interest in the account or chattel paper; or
    2. provides that the assignment, transfer, creation, attachment, perfection, or enforcement of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the account or chattel paper.
  7. Subject to (h) of this section, an account debtor may not waive or vary its option under (b)(3) of this section.
  8. This section is subject to law other than this chapter that establishes a different rule for an account debtor who is an individual and who incurred the obligation primarily for personal, family, or household purposes.
  9. This section does not apply to an assignment of a health care insurance receivable.

History. (§ 1 ch 113 SLA 2000; am § 15 ch 64 SLA 2013)

Effect of amendments. —

The 2013 amendment, effective July 1, 2013, in (e), added “, other than a sale under a disposition under AS 45.29.610 or an acceptance of collateral under AS 45.29.620 ” at the end.

Sec. 45.29.407. Restrictions on creation or enforcement of security interest in leasehold interest or in lessor’s residual interest.

  1. Except as otherwise provided in (b) of this section, a term in a lease agreement is ineffective to the extent that it
    1. prohibits, restricts, or requires the consent of a party to the lease to the assignment, transfer, creation, attachment, perfection, or enforcement of a security interest in an interest of a party under the lease contract or in the lessor’s residual interest in the goods; or
    2. provides that the assignment, transfer, creation, attachment, perfection, or enforcement of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the lease.
  2. Except as otherwise provided in AS 45.12.303(g) , a term described in (a)(2) of this section is effective to the extent that there is
    1. a transfer by the lessee of the lessee’s right of possession or use of the goods in violation of the term; or
    2. a delegation of a material performance of either party to the lease contract in violation of the term.
  3. The creation, attachment, perfection, or enforcement of a security interest in the lessor’s interest under the lease contract or the lessor’s residual interest in the goods is not a transfer that materially impairs the lessee’s prospect of obtaining return performance or materially changes the duty of or materially increases the burden or risk imposed on the lessee within the purview of AS 45.12.303(d) unless, and then only to the extent that, enforcement actually results in a delegation of material performance of the lessor.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.408. Restrictions on assignment of promissory notes, health-care-insurance receivables, and certain general intangibles ineffective.

  1. Except as otherwise provided in (b) of this section, a term in a promissory note or in an agreement between an account debtor and a debtor that relates to a health care insurance receivable or a general intangible, including a contract, permit, license, or franchise, and that prohibits, restricts, or requires the consent of the person obligated on the promissory note or the account debtor to the assignment or transfer of, or creation, attachment, or perfection of a security interest in the promissory note, health care insurance receivable, or general intangible is ineffective to the extent that the term
    1. would impair the creation, attachment, or perfection of a security interest; or
    2. provides that the assignment, transfer, creation, attachment, or perfection of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the promissory note, health care insurance receivable, or general intangible.
  2. The provisions of (a) of this section apply to a security interest in a payment intangible or promissory note only if the security interest arises out of a sale of the payment intangible or promissory note, other than a sale under a disposition under AS 45.29.610 or an acceptance of collateral under AS 45.29.620 .
  3. A rule of law, statute, or regulation that prohibits, restricts, or requires the consent of a government, a governmental body or official, a person obligated on a promissory note, or an account debtor to the assignment or transfer of or creation of a security interest in a promissory note, health care insurance receivable, or general intangible, including a contract, permit, license, or franchise between an account debtor and a debtor, is ineffective to the extent that the rule of law, statute, or regulation
    1. would impair the creation, attachment, or perfection of a security interest; or
    2. provides that the assignment, transfer, creation, attachment, or perfection of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the promissory note, health-care-insurance receivable, or general intangible.
  4. To the extent that a term in a promissory note or in an agreement between an account debtor and a debtor that relates to a health care insurance receivable or general intangible or a rule of law, statute, or regulation described in (c) of this section would be effective under law other than this chapter but is ineffective under (a) or (c) of this section, the creation, attachment, or perfection of a security interest in the promissory note, health care insurance receivable, or general intangible
    1. is not enforceable against the person obligated on the promissory note or the account debtor;
    2. does not impose a duty or obligation on the person obligated on the promissory note or the account debtor;
    3. does not require the person obligated on the promissory note or the account debtor to recognize the security interest, pay or render performance to the secured party, or accept payment or performance from the secured party;
    4. does not entitle the secured party to use or assign the debtor’s rights under the promissory note, health care insurance receivable, or general intangible, including related information or materials furnished to the debtor in the transaction giving rise to the promissory note, health care insurance receivable, or general intangible;
    5. does not entitle the secured party to use, assign, possess, or have access to trade secrets or confidential information of the person obligated on the promissory note or the account debtor; and
    6. does not entitle the secured party to enforce the security interest in the promissory note, health care insurance receivable, or general intangible.
  5. This section prevails over inconsistent provisions of other statutes unless the other statute contains an exemption that refers specifically to this section.

History. (§ 1 ch 113 SLA 2000; am § 16 ch 64 SLA 2013)

Effect of amendments. —

The 2013 amendment, effective July 1, 2013, in (b), added “, other than a sale under a disposition under AS 45.29.610 or an acceptance of collateral under AS 45.29.620 ” at the end.

Sec. 45.29.409. Restrictions on assignment of letter-of-credit rights ineffective.

  1. A term in a letter of credit or a rule of law, statute, regulation, custom, or practice applicable to the letter of credit that prohibits, restricts, or requires the consent of an applicant, issuer, or nominated person to a beneficiary’s assignment of or creation of a security interest in a letter-of-credit right is ineffective to the extent that the term or rule of law, statute, regulation, custom, or practice
    1. would impair the creation, attachment, or perfection of a security interest in the letter-of-credit right; or
    2. provides that the assignment, transfer, creation, attachment, or perfection of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the letter-of-credit right.
  2. To the extent that a term in a letter of credit is ineffective under (a) of this section but would be effective under law other than this chapter or a custom or practice applicable to the letter of credit, to the transfer of a right to draw or otherwise demand performance under the letter of credit, or to the assignment of a right to proceeds of the letter of credit, the creation, attachment, or perfection of a security interest in the letter-of-credit right
    1. is not enforceable against the applicant, issuer, nominated person, or transferee beneficiary;
    2. imposes no duties or obligations on the applicant, issuer, nominated person, or transferee beneficiary; and
    3. does not require the applicant, issuer, nominated person, or transferee beneficiary to recognize the security interest, pay or render performance to the secured party, or accept payment or other performance from the secured party.

History. (§ 1 ch 113 SLA 2000)

Article 5. Filing.

Sec. 45.29.501. Filing office.

  1. Except as otherwise provided in (b) of this section, if the law of this state governs perfection of a security interest or agricultural lien, the office in which to file a financing statement to perfect the security interest or agricultural lien is
    1. the office designated for the recording of a mortgage on the related real property if
      1. the collateral is as-extracted collateral or timber to be cut; or
      2. the financing statement is filed for record as a fixture filing and the collateral is goods that are or are to become fixtures; or
    2. in all other cases, the central filing office of the Department of Natural Resources established under AS 44.37.027 , including a case in which the collateral consists of goods that are or are to become fixtures and the financing statement is not filed for record as a fixture filing.
  2. The office in which to file a financing statement to perfect a security interest in collateral, including fixtures, of a transmitting utility is the central filing office of the Department of Natural Resources established under AS 44.37.027 . The financing statement also constitutes a fixture filing as to the collateral indicated in the financing statement that is or is to become fixtures.

History. (§ 1 ch 113 SLA 2000)

Administrative Code. —

For document recording and filing, see 11 AAC 6.

Notes to Decisions

Recording notice. —

A secured party who has met the statutory requirements for perfecting a security interest in debtor’s fish inventory under Article 9 of the Uniform Commercial Code is not required to record notice of its interest in each of the local recording districts wherein the encumbered property may be found. In re Kemp Pacific Fisheries, Inc., 136 B.R. 268 (W.D. Wash. 1990), aff'd, 952 F.2d 406 (9th Cir. Wash. 1991) (decided under former AS 45.09.401).

Stated in

Newell v. National Bank, 646 P.2d 224 (Alaska 1982) (decided under former AS 45.09.401).

Sec. 45.29.502. Contents of financing statement; mortgage as financing statement; time of filing financing statement.

  1. Subject to (b) of this section, a financing statement is sufficient only if it
    1. provides the name of the debtor;
    2. provides the name of the secured party or a representative of the secured party; and
    3. indicates the collateral covered by the financing statement.
  2. Except as otherwise provided in AS 45.29.501(b) , to be sufficient, a financing statement that covers as-extracted collateral or timber to be cut, or that is filed as a fixture filing and covers goods that are or are to become fixtures, must
    1. satisfy (a) of this section;
    2. indicate that the financing statement covers this type of collateral;
    3. indicate that the financing statement is to be filed for record in the real property records;
    4. provide a description of the real property to which the collateral is related sufficient to give constructive notice of a mortgage under the law of this state if the description were contained in the mortgage of the real property; and
    5. if the debtor does not have an interest of record in the real property, provide the name of a record owner.
  3. A mortgage is effective from the date of recording as a financing statement filed as a fixture filing or as a financing statement covering as-extracted collateral or timber to be cut only if
    1. the mortgage indicates the goods or accounts that it covers;
    2. the goods are or are to become fixtures related to the real property described in the mortgage or the collateral is related to the real property described in the mortgage and is as-extracted collateral or timber to be cut;
    3. the mortgage satisfies the requirements for a financing statement in this section other than an indication that it is to be filed in the real property records; and
    4. the mortgage is recorded.
  4. A financing statement may be filed before a security agreement is made or a security interest otherwise attaches.

History. (§ 1 ch 113 SLA 2000)

Administrative Code. —

For document recording and filing, see 11 AAC 6.

Notes to Decisions

Failure to file a financing statement before the security interest attached, under former AS 45.09.402, did not deprive the holder of a purchase-money interest in noninventory collateral of the favored status given by former AS 45.09.312, where the other secured creditor could have protected itself by inquiring into the debtor’s interest in the collateral before accepting his chattel mortgage. Brodie Hotel Supply, Inc. v. United States, 431 F.2d 1316 (9th Cir. Alaska 1970) (decided under former AS 45.09.402).

Collateral references. —

Sufficiency of debtor’s signature on security agreement or financing statement under UCC § 9-203 and 9-402, 3 ALR4th 502.

Applicability of Article 9 of Uniform Commercial Code to assignment of rights under real-estate sales contract, lease agreement, or mortgage as collateral for separate transaction, 76 ALR4th 765.

Sec. 45.29.503. Name of debtor and secured party.

  1. A financing statement sufficiently provides the name of the debtor
    1. except as otherwise provided in (3) of this subsection, if the debtor is a registered organization or the collateral is held in a trust that is a registered organization, only if the financing statement provides the name that is stated to be the registered organization’s name on the public organic record most recently filed with or issued or enacted by the registered organization’s jurisdiction of organization that purports to state, amend, or restate the registered organization’s name;
    2. subject to (f) of this section, if the collateral is being administered by the personal representative of a decedent, only if the financing statement provides, as the name of the debtor, the name of the decedent and, in a separate part of the financing statement, indicates that the collateral is being administered by a personal representative;
    3. if the collateral is held in a trust that is not a registered organization, only if the financing statement
      1. provides, as the name of the debtor,
        1. if the organic record of the trust specifies a name for the trust, the name specified; or
        2. if the organic record of the trust does not specify a name for the trust, the name of the settlor or testator; and
      2. in a separate part of the financing statement,
        1. if the name is provided in accordance with (A)(i) of this paragraph, indicates that the collateral is held in a trust; or
        2. if the name is provided in accordance with (A)(ii) of this paragraph, provides additional information sufficient to distinguish the trust from other trusts having one or more of the same settlors or the same testator and indicates that the collateral is held in a trust, unless the additional information so indicates;
    4. if the debtor is an individual, only if the financing statement provides
      1. the individual name of the debtor;
      2. the surname and first personal name of the debtor; or
      3. subject to (g) of this section, the name of the individual that is indicated on an unexpired driver’s license that this state has issued to the individual or on an unexpired identification card issued to the individual under AS 18.65.310 ; and
    5. in other cases, if the debtor
      1. has a name, only if the financing statement provides the organizational name of the debtor; and
      2. does not have a name, only if the financing statement provides the names of the partners, members, associates, or other persons of which the debtor is composed, in a manner that each name provided would be sufficient if the person named were the debtor.
  2. A financing statement that provides the name of the debtor in accordance with (a) of this section is not rendered ineffective by the absence of
    1. a trade name or other name of the debtor; or
    2. unless required under (a)(5)(B) of this section, names of partners, members, associates, or other persons of which the debtor is composed.
  3. A financing statement that provides only the debtor’s trade name does not sufficiently provide the name of the debtor.
  4. Failure to indicate the representative capacity of a secured party or representative of a secured party does not affect the sufficiency of a financing statement.
  5. A financing statement may provide the name of more than one debtor and the name of more than one secured party.
  6. The name of the decedent indicated on the order appointing the personal representative of the decedent issued by the court having jurisdiction over the collateral is sufficient as the name of the decedent under (a)(2) of this section.
  7. If this state has issued to an individual more than one driver’s license, more than one identification card under AS 18.65.310 , or both an identification card under AS 18.65.310 and a driver’s license, the driver’s license or identification card that was issued the most recently is the one to which (a)(4)(C) of this section refers.
  8. In this section, “name of the settlor or testator” means,
    1. if the settlor is a registered organization, the name that is stated to be the settlor’s name on the public organic record most recently filed with or issued or enacted by the settlor’s jurisdiction of organization that purports to state, amend, or restate the settlor’s name; or
    2. in cases other than those described in (1) of this subsection, the name of the settlor or testator indicated in the trust’s organic record.

History. (§ 1 ch 113 SLA 2000; am §§ 17 — 19 ch 64 SLA 2013)

Effect of amendments. —

The 2013 amendment, effective July 1, 2013, rewrote (a), substantially reorganizing the content and adding the more detailed information in (a)(4); in (b)(2), substituted “under (a)(5)(B)” for “under (a)(4)(B)”, substituted “of which the debtor is composed” for “comprising the debtor”; added (f) — (h).

Sec. 45.29.504. Indication of collateral.

A financing statement sufficiently indicates the collateral that it covers if the financing statement provides

  1. a description of the collateral pursuant to AS 45.29.108 ; or
  2. an indication that the financing statement covers all assets or all personal property.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.505. Filing and compliance with other statutes and treaties for consignments, leases, other bailments, and other transactions.

  1. A consignor, lessor, or other bailor of goods, a licensor, or a buyer of a payment intangible or promissory note may file a financing statement or may comply with a statute, regulation, or treaty described in AS 45.29.311(a) using the terms “consignor,” “consignee,” “lessor,” “lessee,” “bailor,” “bailee,” “licensor,” “licensee,” “owner,” “registered owner,” “buyer,” “seller,” or words of similar import instead of the terms “secured party” and “debtor.”
  2. AS 45.29.501 45.29.525 apply to the filing of a financing statement under (a) of this section and, as appropriate, to compliance that is equivalent to filing a financing statement under AS 45.29.311(b) , but the filing or compliance is not of itself a factor in determining whether the collateral secures an obligation. If it is determined for another reason that the collateral secures an obligation, a security interest held by the consignor, lessor, bailor, licensor, owner, or buyer that attaches to the collateral is perfected by the filing or compliance.

History. (§ 1 ch 113 SLA 2000)

Notes to Decisions

Judicial adoption of former AS 45.09.408. —

Since UCC § 9-408 was adopted prospectively in Alaska, codified as this section, but did not become effective until July 1, 1983, the supreme court found it necessary to judicially adopt former AS 45.09.408 so that its terms could be given effect to cases filed prior to July 1983. Western Enters., Inc. v. Arctic Office Machs., Inc., 667 P.2d 1232 (Alaska 1983) (decided under former AS 45.09.408).

Sec. 45.29.506. Effect of errors or omissions.

  1. A financing statement substantially satisfying the requirements of AS 45.29.501 45.29.525 is effective, even if it has minor errors or omissions, unless the errors or omissions make the financing statement seriously misleading.
  2. Except as otherwise provided in (c) of this section, a financing statement that fails sufficiently to provide the name of the debtor in accordance with AS 45.29.503(a) is seriously misleading.
  3. If a search of the records of the filing office under the debtor’s correct name, using the filing office’s standard search logic, if any, would disclose a financing statement that fails sufficiently to provide the name of the debtor in accordance with AS 45.29.503(a) , the name provided does not make the financing statement seriously misleading.
  4. For purposes of AS 45.29.508(b) , the “debtor’s correct name” in (c) of this section means the correct name of the new debtor.

History. (§ 1 ch 113 SLA 2000)

Notes to Decisions

Debtor’s name erroneously listed in financing statement. —

When the name of the debtor has been erroneously listed on the financing statement, the dispositive question is usually whether or not a reasonable search under the debtor’s true name would uncover the filing; if so, it is assumed that the searcher is on notice to inquire further to discover the correct identity of the debtor. Under some circumstances, however, the financing statement and underlying documents may not provide sufficient notice. Dietrich-Post Co. v. Alaska Nat'l Bank, 638 F.2d 117 (9th Cir. Alaska 1981) (decided under former AS 45.09.402).

Under the standard of former AS 45.09.402(e), the courts have utilized a flexible, ad hoc approach to determine, by an essentially factual inquiry, the extent to which an error in the financing statement would be misleading to one undertaking a reasonable search. Dietrich-Post Co. v. Alaska Nat'l Bank, 638 F.2d 117 (9th Cir. Alaska 1981) (decided under former AS 45.09.402).

Where a financing statement and its underlying loan documents mistakenly identified a debtor as the predecessor partnership rather than the corporation, the financing statement was seriously misleading and the lender had no perfected security interest in the assets of the corporation. Dietrich-Post Co. v. Alaska Nat'l Bank, 638 F.2d 117 (9th Cir. Alaska 1981) (decided under former AS 45.09.402).

Sec. 45.29.507. Effect of certain events on effectiveness of financing statement.

  1. A filed financing statement remains effective with respect to collateral that is sold, exchanged, leased, licensed, or otherwise disposed of and in which a security interest or agricultural lien continues even if the secured party knows of or consents to the disposition.
  2. Except as otherwise provided in (c) of this section and AS 45.29.508 , a financing statement is not rendered ineffective if, after the financing statement is filed, the information provided in the financing statement becomes seriously misleading under AS 45.29.506 .
  3. If the name that a filed financing statement provides for a debtor becomes insufficient as the name of the debtor under AS 45.29.503(a) so that the financing statement becomes seriously misleading under AS 45.29.506 , the financing statement is
    1. effective to perfect a security interest in collateral acquired by the debtor before, or within four months after, the filed financing statement becomes seriously misleading; and
    2. not effective to perfect a security interest in collateral acquired by the debtor more than four months after the filed financing statement becomes seriously misleading, unless an amendment to the financing statement that renders the financing statement not seriously misleading is filed within four months after the financing statement becomes seriously misleading.

History. (§ 1 ch 113 SLA 2000; am § 20 ch 64 SLA 2013)

Effect of amendments. —

The 2013 amendment, effective July 1, 2013, rewrote the introductory language in (c), which read “If a debtor changes its name sufficiently to cause a filed financing statement to become seriously misleading under AS 45.29.506 ”; in (c)(1) and (c)(2), substituted “filed financing statement becomes seriously misleading” for “change” three times.

Sec. 45.29.508. Effectiveness of financing statement if new debtor becomes bound by security agreement.

  1. Except as otherwise provided in this section, a filed financing statement naming an original debtor is effective to perfect a security interest in collateral in which a new debtor has or acquires rights to the extent that the financing statement would have been effective had the original debtor acquired rights in the collateral.
  2. If the difference between the name of the original debtor and that of the new debtor causes a filed financing statement that is effective under (a) of this section to be seriously misleading under AS 45.29.506 , the financing statement is
    1. effective to perfect a security interest in collateral acquired by the new debtor before, and within four months after, the new debtor becomes bound under AS 45.29.203(d) ; and
    2. not effective to perfect a security interest in collateral acquired by the new debtor more than four months after the new debtor becomes bound under AS 45.29.203(d) unless an initial financing statement providing the name of the new debtor is filed before the expiration of that time.
  3. This section does not apply to collateral as to which a filed financing statement remains effective against the new debtor under AS 45.29.507(a) .

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.509. Persons entitled to file a record.

  1. A person may file an initial financing statement, amendment that adds collateral covered by a financing statement, or amendment that adds a debtor to a financing statement only if
    1. the debtor authorizes the filing in an authenticated record or pursuant to (b) or (c) of this section; or
    2. the person holds an agricultural lien that has become effective at the time of filing and the financing statement covers only collateral in which the person holds an agricultural lien.
  2. By authenticating or becoming bound as debtor by a security agreement, a debtor or new debtor authorizes the filing of an initial financing statement and an amendment covering
    1. the collateral described in the security agreement; and
    2. property that becomes collateral under AS 45.29.315(a)(2) , whether or not the security agreement expressly covers proceeds.
  3. By acquiring collateral in which a security interest or agricultural lien continues under AS 45.29.315(a)(1) , a debtor authorizes the filing of an initial financing statement, and an amendment, covering the collateral and property that becomes collateral under AS 45.29.315(a)(2) .
  4. A person may file an amendment other than an amendment that adds collateral covered by a financing statement or an amendment that adds a debtor to a financing statement only if
    1. the secured party of record authorizes the filing; or
    2. the amendment is a termination statement for a financing statement as to which the secured party of record has failed to file or send a termination statement required under AS 45.29.513(a) or (c), the debtor authorizes the filing, and the termination statement indicates that the debtor authorized it to be filed.
  5. If there is more than one secured party of record for a financing statement, each secured party of record may authorize the filing of an amendment under (d) of this section.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.510. Effectiveness of filed record.

  1. A filed record is effective only to the extent that it was filed by a person who may file it under AS 45.29.509 .
  2. A record authorized by one secured party of record does not affect the financing statement with respect to another secured party of record.
  3. A continuation statement that is not filed within the six-month period prescribed by AS 45.29.515(d) is ineffective.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.511. Secured party of record.

  1. A secured party of record with respect to a financing statement is a person whose name is provided as the name of the secured party or a representative of the secured party in an initial financing statement that has been filed. If an initial financing statement is filed under AS 45.29.514(a) , the assignee named in the initial financing statement is the secured party of record with respect to the financing statement.
  2. If an amendment of a financing statement that provides the name of a person as a secured party or a representative of a secured party is filed, the person named in the amendment is a secured party of record. If an amendment is filed under AS 45.29.514(b) , the assignee named in the amendment is a secured party of record.
  3. A person remains a secured party of record until the filing of an amendment of the financing statement that deletes the person.

History. (§ 1 ch 113 SLA 2000)

Administrative Code. —

For document recording and filing, see 11 AAC 6.

Sec. 45.29.512. Amendment of financing statement.

  1. Subject to AS 45.29.509 , a person may add or delete collateral covered by, continue or terminate the effectiveness of, or, subject to (e) of this section, otherwise amend the information provided in, a financing statement by filing an amendment that
    1. identifies by its file number the initial financing statement to which the amendment relates; and
    2. if the amendment relates to an initial financing statement filed or recorded in a filing office described in AS 45.29.501(a)(1) , provides the date that the initial financing statement was filed or recorded and the information specified in AS 45.29.502(b) .
  2. Except as otherwise provided in AS 45.29.515 , the filing of an amendment does not extend the period of effectiveness of the financing statement.
  3. A financing statement that is amended by an amendment that adds collateral is effective as to the added collateral only from the date of the filing of the amendment.
  4. A financing statement that is amended by an amendment that adds a debtor is effective as to the added debtor only from the date of the filing of the amendment.
  5. An amendment is ineffective to the extent it purports to delete all
    1. debtors and fails to provide the name of a debtor to be covered by the financing statement; or
    2. secured parties of record and fails to provide the name of a new secured party of record.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.513. Termination statement.

  1. A secured party shall cause the secured party of record for a financing statement to file a termination statement for the financing statement if the financing statement covers consumer goods and
    1. there is no obligation secured by the collateral covered by the financing statement and no commitment to make an advance, incur an obligation, or otherwise give value; or
    2. the debtor did not authorize the filing of the initial financing statement.
  2. To comply with (a) of this section, a secured party shall cause the secured party of record to file the termination statement
    1. within one month after there is no obligation secured by the collateral covered by the financing statement and no commitment to make an advance, incur an obligation, or otherwise give value; or
    2. if earlier, within 20 days after the secured party receives an authenticated demand from a debtor.
  3. In cases not governed by (a) of this section, within 20 days after a secured party receives an authenticated demand from a debtor, the secured party shall cause the secured party of record for a financing statement to send to the debtor a termination statement for the financing statement or file the termination statement in the filing office if
    1. except in the case of a financing statement covering accounts or chattel paper that has been sold or goods that are the subject of a consignment, there is no obligation secured by the collateral covered by the financing statement and no commitment to make an advance, incur an obligation, or otherwise give value;
    2. the financing statement covers accounts or chattel paper that has been sold but as to which the account debtor or other person obligated has discharged its obligation;
    3. the financing statement covers goods that were the subject of a consignment to the debtor but are not in the debtor’s possession; or
    4. the debtor did not authorize the filing of the initial financing statement.
  4. Except as otherwise provided in AS 45.29.510 , upon the filing of a termination statement in the filing office, the financing statement to which the termination statement relates ceases to be effective. Except as otherwise provided in AS 45.29.510 , for purposes of AS 45.29.519(g) , 45.29.522(a) , and 45.29.523(c) , the filing in the filing office of a termination statement relating to a financing statement that indicates that the debtor is a transmitting utility also causes the effectiveness of the financing statement to lapse.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.514. Assignment of powers of secured party of record.

  1. Except as otherwise provided in (c) of this section, an initial financing statement may reflect an assignment of all of the secured party’s power to authorize an amendment to the financing statement by providing the name and mailing address of the assignee as the name and address of the secured party.
  2. Except as otherwise provided in (c) of this section, a secured party of record may assign of record all or part of its power to authorize an amendment to a financing statement by filing in the filing office an amendment of the financing statement that
    1. identifies by its file number the initial financing statement to which it relates;
    2. provides the name of the assignor; and
    3. provides the name and mailing address of the assignee.
  3. An assignment of record of a security interest in a fixture covered by a mortgage that is effective as a financing statement filed as a fixture filing under AS 45.29.502(c) may be made only by an assignment of record of the mortgage in the manner provided by law of this state other than the code.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.515. Duration and effectiveness of financing statement; effect of lapsed financing statement.

  1. Except as otherwise provided in (b) and (e) — (g) of this section, a filed financing statement is effective for a period of five years after the date of filing.
  2. Except as otherwise provided in (e) — (g) of this section, an initial financing statement filed in connection with a manufactured home transaction is effective for a period of 30 years after the date of filing if it indicates that it is filed in connection with a manufactured home transaction.
  3. The effectiveness of a filed financing statement lapses on the expiration of the period of its effectiveness unless, before the lapse, a continuation statement is filed under (d) of this section. Upon lapse, a financing statement ceases to be effective and a security interest or agricultural lien that was perfected by the financing statement becomes unperfected unless the security interest is perfected otherwise. If the security interest or agricultural lien becomes unperfected upon lapse, it is considered never to have been perfected as against a purchaser of the collateral for value.
  4. A continuation statement may be filed only within six months before the expiration of the five-year period specified in (a) of this section or the 30-year period specified in (b) of this section, whichever is applicable.
  5. Except as otherwise provided in AS 45.29.510 , upon timely filing of a continuation statement, the effectiveness of the initial financing statement continues for a period of five years commencing on the day on which the financing statement would have become ineffective in the absence of the filing. Upon the expiration of the five-year period, the financing statement lapses in the same manner as provided in (c) of this section unless, before the lapse, another continuation statement is filed under (d) of this section. Succeeding continuation statements may be filed in the same manner to continue the effectiveness of the initial financing statement.
  6. If a debtor is a transmitting utility and a filed financing statement so indicates, the initial financing statement is effective until a termination statement is filed.
  7. A mortgage that is effective as a financing statement filed as a fixture filing under AS 45.29.502(c) remains effective as a financing statement filed as a fixture filing until the mortgage is released or satisfied of record or its effectiveness otherwise terminates as to the real property.

History. (§ 1 ch 113 SLA 2000; am § 21 ch 64 SLA 2013)

Administrative Code. —

For document recording and filing, see 11 AAC 6.

Effect of amendments. —

The 2013 amendment, effective July 1, 2013, in (f), inserted “initial” preceding “financing statement”.

Sec. 45.29.516. What constitutes filing; effectiveness of filing.

  1. Except as otherwise provided in (b) of this section, communication of a record to a filing office and tender of the filing fee or acceptance of the record by the filing office constitutes filing.
  2. Filing does not occur with respect to a record that a filing office refuses to accept because
    1. the record is not communicated by a method or medium of communication authorized by the filing office;
    2. an amount equal to or greater than the applicable filing fee is not tendered;
    3. the filing office is unable to index the record because, in the case of
      1. an initial financing statement, the record does not provide a name for the debtor;
      2. an amendment or information statement, the record
        1. does not identify the initial financing statement as required by AS 45.29.512 or 45.29.518 , as applicable; or
        2. identifies an initial financing statement whose effectiveness has lapsed under AS 45.29.515 ;
      3. an initial financing statement that provides the name of a debtor identified as an individual or an amendment that provides a name of a debtor identified as an individual that was not previously provided in the financing statement to which the record relates, the record does not identify the debtor’s surname;
      4. a record filed in the filing office described in AS 45.29.501(a)(1) that relates to real property, the record does not provide a sufficient description of the real property to which it relates; or
      5. a fixture filing or other filing allowed to be filed for record in a filing office described in AS 45.29.501(a)(1) , the filing does not provide the name of the debtor and record owner;
    4. in the case of an initial financing statement or an amendment that adds a secured party of record, the record does not provide a name and mailing address for the secured party of record;
    5. in the case of an initial financing statement or an amendment that provides a name of a debtor that was not previously provided in the financing statement to which the amendment relates, the record does not
      1. provide a mailing address for the debtor; or
      2. indicate whether the name provided as the name of the debtor is the name of an individual or an organization;
    6. in the case of an assignment reflected in an initial financing statement under AS 45.29.514(a) or an amendment filed under AS 45.29.514(b) , the record does not provide a name and mailing address for the assignee;
    7. in the case of a continuation statement, the record is not filed within the six-month period prescribed by AS 45.29.515(d) ; or
    8. the record is not communicated on a form authorized by filing office regulation.
  3. For purposes of (b) of this section, a record
    1. does not provide information if the filing office is unable to read or decipher the information; and
    2. that does not indicate that it is an amendment or identify an initial financing statement to which it relates as required by AS 45.29.512 , 45.29.514 , or 45.29.518 is an initial financing statement.
  4. A record that is communicated to the filing office with tender of the filing fee, but which the filing office refuses to accept for a reason other than one set out in (b) of this section, is effective as a filed record except as against a purchaser of the collateral who gives value in reasonable reliance on the absence of the record from the files.

History. (§ 1 ch 113 SLA 2000; am § 4 ch 76 SLA 2008; am § 22 ch 64 SLA 2013)

Administrative Code. —

For document recording and filing, see 11 AAC 6.

Effect of amendments. —

The 2013 amendment, effective July 1, 2013, in (b)(3)(B), substituted “information” for “correction, in (b)(3)(C), substituted “surname” for “last name”; rewrote (b)(5)(B), which read “indicate whether the debtor is an individual or an organization”, deleted (b)(5)(C), which pertained to information a debtor organization was required to provide.

Opinions of attorney general. —

The Uniform Commercial Code does not impose any responsibility on the filing officer for determining the legal sufficiency of statements presented for filing. The minimum acceptance criterion for each separate type of UCC filing is that it contain the elements required by the statutory requirement for each specific document; the filing officer does not have responsibility to determine whether or not the elements required for the document have been properly completed. July 16, 1997 Op. Att’y Gen.

Sec. 45.29.517. Effect of indexing errors.

The failure of the filing office to index a record correctly does not affect the effectiveness of the filed record.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.518. Claim concerning inaccurate or wrongfully filed record.

  1. A person may file in the filing office an information statement with respect to a record indexed there under the person’s name if the person believes that the record is inaccurate or was wrongfully filed.
  2. An information statement under (a) of this section must
    1. identify the record to which it relates by
      1. the file number assigned to the initial financing statement to which the record relates; and
      2. if the information statement relates to a record filed for record in a filing office described in AS 45.29.501(a)(1) , the date that the initial financing statement was filed for record and the information specified in AS 45.29.502(b) ;
    2. indicate that it is an information statement; and
    3. provide the basis for the person’s belief that the record is inaccurate and indicate the manner in which the person believes the record should be amended to cure the inaccuracy or provide the basis for the person’s belief that the record was wrongfully filed.
  3. The filing of an information statement does not affect the effectiveness of an initial financing statement or other filed record.
  4. A person may file in the filing office an information statement with respect to a record filed there if the person is a secured party of record with respect to the financing statement to which the record relates and believes that the person that filed the record was not entitled to file the record under AS 45.29.509(d) .
  5. An information statement under (d) of this section must
    1. identify the record to which it relates
      1. by the file number assigned to the initial financing statement to which the record relates; and
      2. if the information statement relates to a record filed in a filing office described in AS 45.29.501(a)(1) , by the date that the initial financing statement was filed and the information specified in AS 45.29.502(b) ;
    2. indicate that it is an information statement; and
    3. provide the basis for the person’s belief that the person that filed the record was not entitled to file the record under AS 45.29.509(d) .

History. (§ 1 ch 113 SLA 2000; am §§ 23, 24 ch 64 SLA 2013)

Administrative Code. —

For document recording and filing, see 11 AAC 6.

Effect of amendments. —

The 2013 amendment, effective July 1, 2013, in the introductory language in (b), inserted “under (a) of this section” following “statement”; substituted “an information” for “a correction” five times throughout the section; added (d) and (e).

Sec. 45.29.519. Numbering, maintaining, and indexing records; communicating information provided in records.

  1. For each record filed in a filing office, the filing office shall
    1. assign a unique number to the filed record;
    2. create a record that bears the number assigned to the filed record and the date and time of filing;
    3. maintain the filed record for public inspection; and
    4. index the filed record in accordance with (c) — (e) of this section.
  2. Except as otherwise provided in (i) of this section, a file number assigned after January 1, 2002, must include a digit that
    1. is mathematically derived from or related to the other digits of the file number; and
    2. aids the filing office in determining whether a number communicated as the file number includes a single digit or transpositional error.
  3. Except as otherwise provided in (d) and (e) of this section, the filing office shall index
    1. an initial financing statement according to the name of the debtor and index all filed records relating to the initial financing statement in a manner that associates with one another an initial financing statement and all filed records relating to the initial financing statement; and
    2. a record that provides a name of a debtor that was not previously provided in the financing statement to which the record relates also according to the name that was not previously provided.
  4. If a financing statement is filed as a fixture filing or covers as-extracted collateral or timber to be cut, it must be filed for record and the filing office shall index it
    1. under the names of the debtor and of each owner of record shown on the financing statement as if they were the mortgagors under a mortgage of the real property described; and
    2. to the extent that the law of this state provides for indexing of mortgages under the name of the mortgagee, under the name of the secured party as if the secured party were the mortgagee thereunder, or, if indexing is by description, as if the financing statement were a mortgage of the real property described.
  5. If a financing statement is filed as a fixture filing or covers as-extracted collateral or timber to be cut, the filing office shall index an assignment filed under AS 45.29.514(a) or an amendment filed under AS 45.29.514(b)
    1. under the name of the assignor as grantor; and
    2. to the extent that the law of this state provides for indexing a record of the assignment of a mortgage under the name of the assignee, under the name of the assignee.
  6. The filing office shall maintain a capability to
    1. retrieve a record by the name of the debtor and, if the filing office is described in
      1. AS 45.29.501(a)(1) , by the file number assigned to the initial financing statement to which the record relates and the date that the record was filed for record; or
      2. AS 45.29.501(a)(2) , by the file number assigned to the initial financing statement to which the record relates; and
    2. associate and retrieve with one another an initial financing statement and each filed record relating to the initial financing statement.
  7. The filing office may not remove a debtor’s name from the index until one year after the effectiveness of a financing statement naming the debtor lapses under AS 45.29.515 with respect to all secured parties of record.
  8. Except as otherwise provided in (i) of this section, the filing office shall perform the acts required by (a) — (e) of this section at the time and in the manner prescribed by filing office regulations, but not later than two business days after the filing office receives the record in question.
  9. The requirements of (b) and (h) of this section do not apply to a filing office described in AS 45.29.501(a)(1) .

History. (§ 1 ch 113 SLA 2000)

Administrative Code. —

For document recording and filing, see 11 AAC 6.

Sec. 45.29.520. Acceptance and refusal to accept record.

  1. A filing office shall refuse to accept a record for filing for a reason set out in AS 45.29.516(b) and may refuse to accept a record for filing only for a reason set out in AS 45.29.516(b) .
  2. If a filing office refuses to accept a record for filing, the filing office shall communicate to the person who presented the record the fact of and reason for the refusal and the date and time the record would have been filed had the filing office accepted it. The communication must be made at the time and in the manner prescribed by filing office regulation but, in the case of a filing office described in AS 45.29.501(a)(2) , no more than two business days after the filing office receives the record.
  3. A filed financing statement satisfying AS 45.29.502(a) and (b) is effective even if the filing office is required to refuse to accept it for filing under (a) of this section. However, AS 45.29.338 applies to a filed financing statement providing information described in AS 45.29.516(b)(5) that is incorrect at the time the financing statement is filed.
  4. If a record communicated to a filing office provides information that relates to more than one debtor, AS 45.29.501 45.29.525 applies as to each debtor separately.

History. (§ 1 ch 113 SLA 2000)

Administrative Code. —

For document recording and filing, see 11 AAC 6.

Sec. 45.29.521. Uniform form of written financing statement and amendment. [Repealed, § 5 ch 76 SLA 2008.]

Sec. 45.29.522. Maintenance and destruction of records.

  1. The filing office shall maintain a record of the information provided in a filed financing statement for at least one year after the effectiveness of the financing statement has lapsed under AS 45.29.515 with respect to all secured parties of record. The record must be retrievable by using the name of the debtor and,
    1. if the record was filed for record in the filing office described in AS 45.29.501(a)(1) , by using the file number assigned to the initial financing statement to which the record relates and the date that the record was filed for record; or
    2. if the record was filed in the filing office described in AS 45.29.501(a)(2) , by using the file number assigned to the initial financing statement to which the record relates.
  2. Except to the extent that a statute governing disposition of public records provides otherwise, the filing office immediately may destroy a written record evidencing a financing statement. However, if the filing office destroys a written record, it shall maintain another record of the financing statement that complies with (a) of this section.

History. (§ 1 ch 113 SLA 2000)

Administrative Code. —

For document recording and filing, see 11 AAC 6.

Sec. 45.29.523. Information from filing office; sale or license of records.

  1. If a person who files a written record requests an acknowledgment of the filing, the filing office shall send to the person an image of the record showing the number assigned to the record under AS 45.29.519(a)(1) and the date and time of the filing of the record. However, if the person furnishes a copy of the record to the filing office, the filing office may instead
    1. note on the copy the number assigned to the record under AS 45.29.519(a)(1) and the date and time of the filing of the record; and
    2. send the copy to the person.
  2. If a person files a record other than a written record, the filing office shall communicate to the person an acknowledgment that provides
    1. the information in the record;
    2. the number assigned to the record under AS 45.29.519(a)(1) ; and
    3. the date and time of the filing of the record.
  3. The filing office shall communicate or otherwise make available in a record the following information to a person who requests it:
    1. whether there is on file on a date and time specified by the filing office, but not a date earlier than three business days before the filing office receives the request, a financing statement that
      1. designates a particular debtor;
      2. has not lapsed under AS 45.29.515 with respect to all secured parties of record; and
      3. if the request so states, has lapsed under AS 45.29.515 and a record of which is maintained by the filing office under AS 45.29.522(a) ;
    2. the date and time of filing of each financing statement; and
    3. the information provided in each financing statement.
  4. In complying with its duty under (c) of this section, the filing office may communicate information in any medium. However, if requested, the filing office shall communicate information by issuing its written certificate.
  5. The filing office shall perform the acts required by (a) — (d) of this section at the time and in the manner prescribed by filing office regulations but, in the case of a filing office described in AS 45.29.501(a)(2) , not later than two business days after the filing office receives the request.
  6. At least bi-weekly, the filing office described in AS 45.29.501 (a)(2) shall offer to sell or license to the public on a nonexclusive basis, in bulk, copies of all records filed in it under AS 45.29.501 45.29.525 , in every medium from time to time available to the filing office.

History. (§ 1 ch 113 SLA 2000)

Administrative Code. —

For document recording and filing, see 11 AAC 6.

Sec. 45.29.524. Delay by filing office.

Delay by the filing office beyond a time limit prescribed by AS 45.29.501 45.29.525 is excused if

  1. the delay is caused by interruption of communication or computer facilities, war, emergency conditions, failure of equipment, or other circumstances beyond control of the filing office; and
  2. the filing office exercises reasonable diligence under the circumstances.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.525. Fees.

The Department of Natural Resources shall adopt regulations that set the fees for

  1. recording or filing and indexing a document under AS 45.29.501 45.29.525 ; and
  2. responding to a request for information or copies from the filing office, including for communicating whether there is on file a financing statement naming a particular debtor.

History. (§ 1 ch 113 SLA 2000)

Administrative Code. —

For fees for department services, see 11 AAC 5.

For document recording and filing, see 11 AAC 6.

Sec. 45.29.530. Accounting; appropriations.

Under AS 37.05.146(c) , fees for services for recording and related services of the Department of Natural Resources for secured transactions under AS 45.29 (Uniform Commercial Code — Secured Transactions) shall be accounted for separately, and appropriations from the account are not made from the unrestricted general fund.

History. (§ 5 ch 51 SLA 2001)

Revisor’s notes. —

In 2002, “AS 37.05.146(c) ” was substituted for “AS 37.05.146 (b)” to reflect the 2002 renumbering of AS 37.05.146 .

Article 6. Default.

Sec. 45.29.601. Rights after default; judicial enforcement; consignor or buyer of accounts, chattel paper, payment intangibles, or promissory notes.

  1. After default, a secured party has the rights provided in AS 45.29.601 45.29.628 and, except as otherwise provided in AS 45.29.602 , those provided by agreement of the parties. A secured party
    1. may reduce a claim to judgment, foreclose, or otherwise enforce the claim, security interest, or agricultural lien by available judicial procedures; and
    2. if the collateral is documents, may proceed either as to the documents or as to the goods the documents cover.
  2. A secured party in possession of collateral or control of collateral under AS 45.07.116 , AS 45.29.104 , 45.29.105 , 45.29.106 , or 45.29.107 has the rights and duties provided in AS 45.29.207 .
  3. The rights under (a) and (b) of this section are cumulative and may be exercised simultaneously.
  4. Except as otherwise provided in (g) of this section and AS 45.29.605 , after default, a debtor and an obligor have the rights provided in this part and by agreement of the parties.
  5. If a secured party has reduced its claim to judgment, the lien of a levy that may be made upon the collateral by virtue of an execution based on the judgment relates back to the earliest of the date
    1. of perfection of the security interest or agricultural lien in the collateral;
    2. of filing a financing statement covering the collateral; or
    3. specified in a statute under which the agricultural lien was created.
  6. A sale pursuant to an execution is a foreclosure of the security interest or agricultural lien by judicial procedure within the meaning of this section. A secured party may purchase at the sale and thereafter hold the collateral free of any other requirements of this chapter.
  7. Except as otherwise provided in AS 45.29.607(c) , AS 45.29.601 45.29.628 impose no duties on a secured party that is a consignor or is a buyer of accounts, chattel paper, payment intangibles, or promissory notes.

History. (§ 1 ch 113 SLA 2000; am § 110 ch 44 SLA 2009; am § 30 ch 3 SLA 2017)

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 “AS 45.07.116 ” following “control of collateral under”.

The 2017 amendment, effective July 1, 2017, in (g), substituted “AS 45.29.601 45.29.628 impose” for “45.29.601 — 45.29.628 imposes” following “provided in AS 45.29.607(c) ,”.

Notes to Decisions

Creditor’s remedies under former AS 45.09.501(a) are cumulative. Native Alaskan Reclamation & Pest Control v. United Bank Alaska, 685 P.2d 1211 (Alaska 1984) (decided under former AS 45.09.501).

A secured party’s right and remedies following the debtor’s default are governed by former AS 45.09.501 — 45.09.507. Moran v. Holman, 514 P.2d 817 (Alaska 1973) (decided under former AS 45.09.501).

Quoted in

Alaska Statebank v. Fairco, 674 P.2d 288 (Alaska 1983) (decided under former AS 45.09.501).

Collateral references. —

Value of trade-in taken on sale of collateral for purposes of computing surplus or deficiency, 72 ALR4th 1128.

Sec. 45.29.602. Waiver and variance of rights and duties.

Except as otherwise provided in AS 45.29.624 , to the extent that they give rights to a debtor or obligor and impose duties on a secured party, the debtor or obligor may not waive or vary the rules stated in the following sections:

  1. AS 45.29.207(b)(4)(C) , which deals with use and operation of the collateral by the secured party;
  2. AS 45.29.210 , which deals with requests for an accounting and requests concerning a list of collateral and statement of account;
  3. AS 45.29.607(c) , which deals with collection and enforcement of collateral;
  4. AS 45.29.608(a) and 45.29.615(c) to the extent that they deal with application or payment of noncash proceeds of collection, enforcement, or disposition;
  5. AS 45.29.608(a) and 45.29.615(d) to the extent that they require accounting for or payment of surplus proceeds of collateral;
  6. AS 45.29.609 to the extent that it imposes on a secured party that takes possession of collateral without judicial process the duty to do so without breach of the peace;
  7. AS 45.29.610(b) , 45.29.611 , 45.29.613 , and 45.29.614 , which deal with disposition of collateral;
  8. AS 45.29.615(f) , which deals with calculation of a deficiency or surplus when a disposition is made to the secured party, a person related to the secured party, or a secondary obligor;
  9. AS 45.29.616 , which deals with explanation of the calculation of a surplus or deficiency;
  10. AS 45.29.620 45.29.622 , which deal with acceptance of collateral in satisfaction of obligation;
  11. AS 45.29.623 , which deals with redemption of collateral;
  12. AS 45.29.624 , which deals with permissible waivers; and
  13. AS 45.29.625 and 45.29.626 , which deal with the secured party’s liability for failure to comply with this chapter.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.603. Agreement on standards concerning rights and duties.

  1. The parties may determine by agreement the standards measuring the fulfillment of the rights of a debtor or obligor and the duties of a secured party under a rule stated in AS 45.29.602 if the standards are not manifestly unreasonable.
  2. The provisions of (a) of this section do not apply to the duty under AS 45.29.609 to refrain from breaching the peace.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.604. Procedure if security agreement covers real property or fixtures.

  1. If a security agreement covers both personal and real property, a secured party may proceed
    1. under AS 45.29.601 45.29.628 as to the personal property without prejudicing any rights with respect to the real property; or
    2. as to both the personal property and the real property in accordance with the rights with respect to the real property, in which case the other provisions of AS 45.29.601 45.29.628 do not apply.
  2. Subject to (c) of this section, if a security agreement covers goods that are or become fixtures, a secured party may proceed
    1. under AS 45.29.601 45.29.628 ; or
    2. in accordance with the rights with respect to real property, in which case the other provisions of AS 45.29.601 45.29.628 do not apply.
  3. Subject to the other provisions of AS 45.29.601 45.29.628 , if a secured party holding a security interest in fixtures has priority over all owners and encumbrancers of the real property, the secured party, after default, may remove the collateral from the real property.
  4. A secured party that removes collateral shall promptly reimburse an encumbrancer or owner of the real property, other than the debtor, for the cost of repair of physical injury caused by the removal. The secured party need not reimburse the encumbrancer or owner for diminution in value of the real property caused by the absence of the goods removed or by the necessity of replacing them. A person entitled to reimbursement may refuse permission to remove until the secured party gives adequate assurance for the performance of the obligation to reimburse.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.605. Unknown debtor or secondary obligor.

A secured party does not owe a duty based on its status as secured party to

  1. a person who is a debtor or obligor unless the secured party knows
    1. that the person is a debtor or obligor;
    2. the identity of the person; and
    3. how to communicate with the person; or
  2. a secured party or lienholder that has filed a financing statement against a person unless the secured party knows
    1. that the person is a debtor; and
    2. the identity of the person.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.606. Time of default for agricultural lien.

For purposes of AS 45.29.601 45.29.628 , a default occurs in connection with an agricultural lien at the time the secured party becomes entitled to enforce the lien in accordance with the statute under which it was created.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.607. Collection and enforcement by secured party.

  1. If so agreed and, in any event, after default, a secured party
    1. may notify an account debtor or other person obligated on collateral to make payment or otherwise render performance to or for the benefit of the secured party;
    2. may take proceeds to which the secured party is entitled under AS 45.29.315 ;
    3. may enforce the obligations of an account debtor or other person obligated on collateral and exercise the rights of the debtor with respect to the obligation of the account debtor or other person obligated on collateral to make payment or otherwise render performance to the debtor and with respect to property that secures the obligations of the account debtor or other person obligated on the collateral;
    4. if it holds a security interest in a deposit account perfected by control under AS 45.29.104(a)(1) , may apply the balance of the deposit account to the obligation secured by the deposit account; and
    5. if it holds a security interest in a deposit account perfected by control under AS 45.29.104(a)(2) or (3), may instruct the bank to pay the balance of the deposit account to or for the benefit of the secured party.
  2. If necessary to enable a secured party to exercise under (a)(3) of this section the right of a debtor to enforce a mortgage nonjudicially, the secured party may record in the office in which the mortgage is recorded
    1. a copy of the security agreement that creates or provides for a security interest in the obligation secured by the mortgage; and
    2. the secured party’s sworn affidavit in recordable form stating that
      1. a default has occurred with respect to the obligation secured by the mortgage; and
      2. the secured party is entitled to enforce the mortgage nonjudicially.
  3. A secured party shall proceed in a commercially reasonable manner if the secured party
    1. undertakes to collect from or enforce an obligation of an account debtor or other person obligated on collateral; and
    2. is entitled to charge back uncollected collateral or otherwise to full or limited recourse against the debtor or a secondary obligor.
  4. A secured party may deduct from the collections made under (c) of this section reasonable expenses of collection and enforcement, including reasonable attorney fees and legal expenses incurred by the secured party.
  5. This section does not determine whether an account debtor, bank, or other person obligated on collateral owes a duty to a secured party.

History. (§ 1 ch 113 SLA 2000; am § 25 ch 64 SLA 2013)

Cross references. —

For the effect of (d) of this section on Rule 79, Alaska Rules of Civil Procedure, see sec. 32, ch. 113, SLA 2000 in the 2000 Temporary & Special Acts.

Effect of amendments. —

The 2013 amendment, effective July 1, 2013, in (b)(2)(A), inserted “with respect to the obligation secured by the mortgage” following “occurred”.

Sec. 45.29.608. Application of proceeds of collection or enforcement; liability for deficiency and right to surplus.

  1. If a security interest or agricultural lien secures payment or performance of an obligation, the following rules apply:
    1. a secured party shall apply or pay over for application the cash proceeds of collection or enforcement under AS 45.29.607 in the following order to
      1. the reasonable expenses of collection and enforcement and, to the extent provided for by agreement and not prohibited by law, reasonable attorney fees and legal expenses incurred by the secured party;
      2. the satisfaction of obligations secured by the security interest or agricultural lien under which the collection or enforcement is made; and
      3. the satisfaction of obligations secured by a subordinate security interest in or other lien on the collateral subject to the security interest or agricultural lien under which the collection or enforcement is made if the secured party receives an authenticated demand for proceeds before distribution of the proceeds is completed;
    2. if requested by a secured party, a holder of a subordinate security interest or other lien shall furnish reasonable proof of the interest or lien within a reasonable time; unless the holder complies, the secured party need not comply with the holder’s demand under (1)(C) of this subsection;
    3. a secured party need not apply or pay over for application noncash proceeds of collection and enforcement under AS 45.29.607 unless the failure to do so would be commercially unreasonable; a secured party that applies or pays over for application noncash proceeds shall do so in a commercially reasonable manner;
    4. a secured party shall account to and pay a debtor for any surplus, and the obligor is liable for any deficiency.
  2. If the underlying transaction is a sale of accounts, chattel paper, payment intangibles, or promissory notes, the debtor is not entitled to any surplus, and the obligor is not liable for any deficiency.

History. (§ 1 ch 113 SLA 2000)

Cross references. —

For the effect of (a)(1)(A) of this section on Rule 79, Alaska Rules of Civil Procedure, see sec. 32, ch. 113, SLA 2000 in the 2000 Temporary & Special Acts.

Sec. 45.29.609. Secured party’s right to take possession after default.

  1. After default, a secured party
    1. may take possession of the collateral; and
    2. without removal, may render equipment unusable and dispose of collateral on a debtor’s premises under AS 45.29.610 .
  2. A secured party may proceed under subsection (a) of this section
    1. in accordance with judicial process; or
    2. without judicial process if it proceeds without breach of the peace.
  3. If so agreed and, in any event, after default, a secured party may require the debtor to assemble the collateral and make it available to the secured party at a place to be designated by the secured party that is reasonably convenient to both parties.

History. (§ 1 ch 113 SLA 2000)

Notes to Decisions

Purpose. —

Former AS 45.09.503 was enacted to bring the law of Alaska in conformance with the general law on chattel mortgages. Hollembaek v. Alaska Rural Rehabilitation Corp., 447 P.2d 67 (Alaska 1968) (decided under former AS 45.09.503).

Seller may recover damages after reclaiming contract goods upon default by the buyer where the seller has retained a security interest in the goods sold. Kelly v. Miller, 575 P.2d 1221 (Alaska 1978) (decided under former AS 45.09.503).

Former AS 45.09.503 did not require any notice to be given. Weaver v. O'Meara Motor Co., 452 P.2d 87 (Alaska 1969) (decided under former AS 45.09.503).

Notice is not required before a secured party is entitled, after a default, to seize collateral. Kupka v. Morey, 541 P.2d 740 (Alaska 1975) (decided under former AS 45.09.503).

Repossession held wrongful because of lack of default. —

Where lack of notice of repossession pertained to placing defendant on notice that he would have responsibility for taking care of the insurance on an aircraft leased by him, in the absence of such notice, under the circumstances here involved, defendant could not be held responsible for maintaining the insurance, and thus there was no breach of the lease terms. The repossession was wrongful, not because of the lack of notice of the repossession per se, but because there was no default justifying repossession. Kupka v. Morey, 541 P.2d 740 (Alaska 1975) (decided under former AS 45.09.503).

Failure to give notice held harmless. —

Because a debtor LLC did not seek return of airplanes that were collateral under a security agreement and because an affiliated LLC and an individual who was connected to both of the LLCs did not appeal the superior court's decision that they failed to prove any of their claims against a creditor LLC (or their putative claims against the manager of the LLC), the failure to give any notice before action on the alleged default was harmless. Crowley v. N. Aviation, LLC, 441 P.3d 407 (Alaska 2019).

Adequacy of findings. —

Superior court's judgment against debtors as well as its order transferring title to an airplane that was collateral under a security agreement were vacated because, with no factual determinations to review, the appellate court was unable to evaluate whether the disputed actions of a creditor in removing the engine and avionics from the airplane were done in breach of the peace. Crowley v. N. Aviation, LLC, 441 P.3d 407 (Alaska 2019).

Applied in

Brown v. Baker, 688 P.2d 943 (Alaska 1984) (decided under former AS 45.09.503).

Quoted in

Stanley v. Fabricators, 459 P.2d 467 (Alaska 1969) (decided under former AS 45.09.503).

Stated in

Moran v. Holman, 514 P.2d 817 (Alaska 1973) (decided under former AS 45.09.503).

Collateral references. —

Validity, under state law, of self-help repossession of goods pursuant to UCC § 9-503, 75 ALR3d 1061.

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

Sec. 45.29.610. Disposition of collateral after default.

  1. After default, a secured party may sell, lease, license, or otherwise dispose of any or all of the collateral in its present condition or following commercially reasonable preparation or processing.
  2. Every aspect of a disposition of collateral, including the method, manner, time, place, and other terms, must be commercially reasonable. If commercially reasonable, a secured party may dispose of collateral by public or private proceedings, by one or more contracts, as a unit or in parcels, and at any time and place and on any terms.
  3. A secured party may purchase collateral
    1. at a public disposition; or
    2. at a private disposition only if the collateral is of a kind that is customarily sold on a recognized market or the subject of widely distributed standard price quotations.
  4. A contract for sale, lease, license, or other disposition includes the warranties relating to title, possession, quiet enjoyment, and the like that by operation of law accompany a voluntary disposition of property of the kind subject to the contract.
  5. A secured party may disclaim or modify warranties under (d) of this section
    1. in a manner that would be effective to disclaim or modify the warranties in a voluntary disposition of property of the kind subject to the contract of disposition; or
    2. by communicating to the purchaser a record evidencing the contract for disposition and including an express disclaimer or modification of the warranties.
  6. A record is sufficient to disclaim warranties under (e) of this section if it indicates “There is no warranty relating to title, possession, quiet enjoyment, or the like in this disposition” or uses words of similar import.

History. (§ 1 ch 113 SLA 2000)

Notes to Decisions

Adequacy of findings. —

Because the record had no information about disposition of the airplanes that were collateral under a security agreement, the appellate court could not evaluate the superior court's finding that a creditor's failure to give pre-disposition notice was harmless. Crowley v. N. Aviation, LLC, 441 P.3d 407 (Alaska 2019).

Collateral references. —

Public or private sale under UCC § 9-504(3), 60 ALR4th 1012.

Sec. 45.29.611. Notification before disposition of collateral.

  1. In this section, “notification date” means the earlier of the date on which
    1. a secured party sends to the debtor and any secondary obligor an authenticated notification of disposition; or
    2. the debtor and any secondary obligor waive the right to notification.
  2. Except as otherwise provided in (d) of this section, a secured party that disposes of collateral under AS 45.29.610 shall send to the persons specified in (c) of this section a reasonable authenticated notification of disposition.
  3. To comply with (b) of this section, the secured party shall send an authenticated notification of disposition to
    1. the debtor;
    2. any secondary obligor; and
    3. if the collateral is other than consumer goods,
      1. any other person from which the secured party has received, before the notification date, an authenticated notification of a claim of an interest in the collateral;
      2. any other secured party or lienholder that, 10 days before the notification date, held a security interest in or other lien on the collateral perfected by the filing of a financing statement that
        1. identified the collateral;
        2. was indexed under the debtor’s name as of that date; and
        3. was filed in the office in which to file a financing statement against the debtor covering the collateral as of that date; and
      3. any other secured party that, 10 days before the notification date, held a security interest in the collateral perfected by compliance with a statute, regulation, or treaty described in AS 45.29.311(a) .
  4. The provisions of (b) of this section do not apply if the collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market.
  5. A secured party complies with the requirement for notification prescribed by (c)(3)(B) of this section if
    1. not later than 20 days or earlier than 30 days before the notification date, the secured party requests, in a commercially reasonable manner, information concerning financing statements indexed under the debtor’s name in the office indicated in (c)(3)(B) of this section; and
    2. before the notification date, the secured party
      1. did not receive a response to the request for information; or
      2. received a response to the request for information and sent an authenticated notification of disposition to each secured party or other lienholder named in that response whose financing statement covered the collateral.

History. (§ 1 ch 113 SLA 2000)

Notes to Decisions

Adequacy of findings. —

Because the record had no information about disposition of the airplanes that were collateral under a security agreement, the appellate court could not evaluate the superior court's finding that a creditor's failure to give pre-disposition notice was harmless. Crowley v. N. Aviation, LLC, 441 P.3d 407 (Alaska 2019).

Collateral references. —

Sufficiency of notice of secured party’s proposed disposition of collateral. 35 Am. Jur. POF2d, pp. 517-588.

Failure of secured creditor to give required notice of disposition of collateral as bar to deficiency judgment, 59 ALR3d 401.

Construction of term “debtor” as used in UCC § 9-504(3), requiring secured party to give notice to debtor of sale of collateral securing obligation, 5 ALR4th 1291.

Nature of collateral which secured party may sell or otherwise dispose of without giving notice to defaulting debtor under UCC § 9-504(3), 11 ALR4th 1060.

Sec. 45.29.612. Timeliness of notification before disposition of collateral.

  1. Except as otherwise provided in (b) of this section, whether a notification is sent within a reasonable time is a question of fact.
  2. In a transaction other than a consumer transaction, a notification of disposition sent after default and 10 days or more before the earliest time of disposition set out in the notification is sent within a reasonable time before the disposition.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.613. General notification before disposition of collateral.

Except in a consumer goods transaction, the following rules apply:

  1. the contents of a notification of disposition are sufficient if the notification
    1. describes the debtor and the secured party;
    2. describes the collateral that is the subject of the intended disposition;
    3. states the method of intended disposition;
    4. states that the debtor is entitled to an accounting of the unpaid indebtedness and states the charge, if any, for an accounting; and
    5. states the time and place of a public disposition or the time after which any other disposition is to be made;
  2. whether the contents of a notification that lacks any of the information specified in (1) of this section are nevertheless sufficient is a question of fact;
  3. the contents of a notification providing substantially the information specified in (1) of this section are sufficient even if the notification includes
    1. information not specified by that paragraph; or
    2. minor errors that are not seriously misleading;
  4. a particular phrasing of the notification is not required;
  5. the following form of notification and the form appearing in  AS 45.29.614 (3), when completed, each  provide sufficient information:

NOTIFICATION OF DISPOSITION OF COLLATERAL To: (Name of debtor, obligor, or other person to which the notification is sent) From: (Name, address, and telephone number of secured party) Name of Debtor(s): (Include only if debtor(s) are not an addressee) (For a public disposition:) We will sell (or lease or license, as applicable) the (to the highest qualified bidder) in public as follows: (describe collateral) Day and Date: Time: Place: (For a private disposition:) We will sell (or lease or license, as applicable) the privately sometime after . (describe collateral) (day and date) You are entitled to an accounting of the unpaid indebtedness secured by the property that we intend to sell (or lease or license, as applicable) (for a charge of $ ). You may request an accounting by calling us at . (telephone number)

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History. (§ 1 ch 113 SLA 2000; am § 31 ch 3 SLA 2017)

Effect of amendments. —

The 2017 amendment, effective July 1, 2017, at the end of the introductory language in (5), substituted “each provide sufficient information” for “each provides sufficient information”.

Collateral references. —

Sufficiency of secured party’s notification of sale or other intended disposition of collateral under UCC § 9-504(3), 11 ALR4th 1061.

Sec. 45.29.614. Notification before disposition of collateral in consumer goods transaction.

In a consumer goods transaction, the following rules apply:

  1. a notification of disposition must provide the following information:
    1. the information specified in  AS 45.29.613 (1);
    2. a description of any liability for a deficiency of the person to which the notification is sent;
    3. a telephone number from which the amount that must be paid to the secured party to redeem the collateral under  AS 45.29.623 is available; and
    4. a telephone number or mailing address from which additional information concerning the disposition and the obligation secured is available.
  2. a particular phrasing of the notification is not required;
  3. the following form of notification, when completed, provides sufficient information:
  4. a notification in the form of (3) of this section is sufficient even if additional information appears at the end of the form;
  5. a notification in the form of (3) of this section is sufficient even if it includes errors in information not required by (1) of this section unless the error is misleading with respect to rights arising under this chapter;
  6. if a notification under this section is not in the form set out in (3) of this section, law other than this chapter determines the effect of including information not required by (1) of this section.

(Name and address of secured party) (Date) NOTICE OF OUR PLAN TO SELL PROPERTY (Name and address of any obligor who is also a debtor) Subject: (Identification of Transaction) We have your , because you broke promises in our agreement. (describe collateral) (For a public disposition:) We will sell at public sale. A sale could include a lease or license. The sale will be held as follows: (describe collateral) Date: Time: Place: You may attend the sale and bring budders if you want. (For a public disposition:) We will sell at private sale sometime after . A sale cold include a lease or license. (describe collateral) (date) The money that we get from the sale, after paying our costs, will reduce the amount you owe. If we get less money than you owe, you still owe us the difference. If we get more money than you owe, you will get the extra money, unless we must pay it to someone else. (will or will not, as applicable) You can get the property back at any time before we sell it by paying us the full amount you owe (not just the past due payments), including our expenses. To learn the exact amount you must pay, call us at . (telephone number) If you want us to explain to you in writing how we have figured the amount that you owe us, you may call us at an request a written explanation. (We will charge you $ for the explanation if we sent you another written explanation of the amount you owe within the last six months.) (telephone number) If you need more information about the sale call us at (or write us at . (telephone number) (secured party’s address) We are sending this notice to the following other people who have an interest in or who owe money under your agreement: (describe collateral) . (Names of all other debtors and obligors, if any)

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History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.615. Application of proceeds of disposition; liability for deficiency and right to surplus.

  1. A secured party shall apply or pay over for application the cash proceeds of disposition under AS 45.29.610 in the following order:
    1. the reasonable expenses of retaking, holding, preparing for disposition, processing, and disposing and, to the extent provided for by agreement and not prohibited by law, reasonable attorney fees and legal expenses incurred by the secured party;
    2. the satisfaction of obligations secured by the security interest or agricultural lien under which the disposition is made;
    3. the satisfaction of obligations secured by any subordinate security interest in or other subordinate lien on the collateral if
      1. the secured party receives from the holder of the subordinate security interest or other lien an authenticated demand for proceeds before distribution of the proceeds is completed; and
      2. in a case in which a consignor has an interest in the collateral, the subordinate security interest or other lien is senior to the interest of the consignor; and
    4. a secured party that is a consignor of the collateral if the secured party receives from the consignor an authenticated demand for proceeds before distribution of the proceeds is completed.
  2. If requested by a secured party, a holder of a subordinate security interest or other lien shall furnish reasonable proof of the interest or lien within a reasonable time. Unless the holder does so, the secured party need not comply with the holder’s demand under (a)(3) of this section.
  3. A secured party need not apply or pay over for application noncash proceeds of disposition under AS 45.29.610 unless the failure to do so would be commercially unreasonable. A secured party that applies or pays over for application noncash proceeds shall do so in a commercially reasonable manner.
  4. If the security interest under which a disposition is made secures payment or performance of an obligation, after making the payments and applications required by (a) of this section and permitted by (c) of this section,
    1. unless (a)(4) of this section requires the secured party to apply or pay over cash proceeds to a consignor, the secured party shall account to and pay a debtor for any surplus; and
    2. the obligor is liable for any deficiency.
  5. If the underlying transaction is a sale of accounts, chattel paper, payment intangibles, or promissory notes,
    1. the debtor is not entitled to any surplus; and
    2. the obligor is not liable for any deficiency.
  6. The surplus or deficiency after a disposition is calculated based on the amount of proceeds that would have been realized in a disposition complying with AS 45.29.601 45.29.628 to a transferee other than the secured party, a person related to the secured party, or a secondary obligor if
    1. the transferee in the disposition is the secured party, a person related to the secured party, or a secondary obligor; and
    2. the amount of proceeds of the disposition is significantly below the range of proceeds that a complying disposition to a person other than the secured party, a person related to the secured party, or a secondary obligor would have brought.
  7. A secured party who receives cash proceeds of a disposition in good faith and without knowledge that the receipt violates the rights of the holder of a security interest or other lien that is not subordinate to the security interest or agricultural lien under which the disposition is made
    1. takes the cash proceeds free of the security interest or other lien;
    2. is not obligated to apply the proceeds of the disposition to the satisfaction of obligations secured by the security interest or other lien; and
    3. is not obligated to account to or pay the holder of the security interest or other lien for any surplus.

History. (§ 1 ch 113 SLA 2000)

Cross references. —

For the effect of (a)(1) of this section on Rule 79, Alaska Rules of Civil Procedure, see sec. 32, ch. 113, SLA 2000 in the 2000 Temporary & Special Acts.

Notes to Decisions

Sale price of collateral determines whether obligation extinguished. —

It is the amount for which the collateral may be sold at a subsequent execution sale that determines whether the obligation is extinguished. First Nat'l Bank v. Enzler, 537 P.2d 517 (Alaska 1975) (decided under former AS 45.09.504).

And its estimated value when returned does not. —

The estimated value of collateral when returned does not determine whether the debt thereby secured is satisfied. First Nat'l Bank v. Enzler, 537 P.2d 517 (Alaska 1975) (decided under former AS 45.09.504).

Effect of contingency of debt before sale of collateral. —

Although the liability for a debt in the interim period before the collateral is sold at an execution sale is contingent in that it will only arise should the collateral sell for less than the amount owing, this fact does not preclude the present existence of a debt owed by the contingently liable party to the secured creditor. First Nat'l Bank v. Enzler, 537 P.2d 517 (Alaska 1975) (decided under former AS 45.09.504).

Where collateral is sold in a sale that does not comply with former AS 45.09.504, there exists a rebuttable presumption that the fair and reasonable value of the collateral is at least equal to the amount of the outstanding debt. Queen of the N., Inc. v. LeGrue, 582 P.2d 144 (Alaska 1978) (decided under former AS 45.09.504).

Factors in determining value of collateral. —

The local economic market at the time of sale is a recognized factor in determining the value of the collateral. Hoch v. Ellis, 627 P.2d 1060 (Alaska 1981) (decided under former AS 45.09.504).

Fair market value of automobiles. —

The wholesale market was the proper measure of the fair market value of automobiles where the creditor, a bank, did not have the facilities to store or sell the vehicles and was not in the business of dealing, selling, or renting cars. Dischner v. United Bank Alaska, 725 P.2d 488 (Alaska 1986) (decided under former AS 45.09.504).

Where the creditor was the only bidder at the foreclosure sale and “sold” the property to itself, which amount was credited against the balance due on the note that had been executed by the debtor, this price at which the creditor bought the collateral that secured the debt was not a reliable indicator of the fair market value of the collateral because the transaction was self-serving. Kobuk Eng'g & Contracting Servs. v. Superior Tank & Constr. Co-Alaska, 568 P.2d 1007 (Alaska 1977) (decided under former AS 45.09.504).

Former AS 45.09.504 applicable as matter of law. —

Where a vessel is repossessed upon default without foreclosure action and sold by the creditors, former AS 45.09.504 applies as a matter of law. Brown v. Baker, 688 P.2d 943 (Alaska 1984) (decided under former AS 45.09.504).

Adequacy of findings. —

Because the record had no information about disposition of the airplanes that were collateral under a security agreement, the appellate court could not evaluate the superior court's finding that a creditor's failure to give pre-disposition notice was harmless. Crowley v. N. Aviation, LLC, 441 P.3d 407 (Alaska 2019).

Cited in

Crowley v. N. Aviation, LLC, 441 P.3d 407 (Alaska 2019).

Collateral references. —

Value of trade-in taken on sale of collateral for purposes of computing surplus or deficiency, 72 ALR4th 1128.

Sec. 45.29.616. Explanation of calculation of surplus or deficiency.

  1. In this section,
    1. “explanation” means a writing that
      1. states the amount of the surplus or deficiency;
      2. provides an explanation in accordance with (c) of this section of how the secured party calculated the surplus or deficiency;
      3. states, if applicable, that future debits, credits, charges, including additional credit service charges or interest, rebates, and expenses may affect the amount of the surplus or deficiency; and
      4. provides a telephone number or mailing address from which additional information concerning the transaction is available;
    2. “request” means a record
      1. authenticated by a debtor or consumer obligor;
      2. requesting that the recipient provide an explanation; and
      3. sent after disposition of the collateral under AS 45.29.610 .
  2. In a consumer goods transaction in which the debtor is entitled to a surplus or a consumer obligor is liable for a deficiency under AS 45.29.615 , the secured party shall
    1. send an explanation to the debtor or consumer obligor, as applicable, after the disposition and
      1. before or when the secured party accounts to the debtor and pays any surplus or first makes written demand on the consumer obligor after the disposition for payment of the deficiency; and
      2. within 14 days after receipt of a request; or
    2. in the case of a consumer obligor who is liable for a deficiency, within 14 days after receipt of a request, send to the consumer obligor a record waiving the secured party’s right to a deficiency.
  3. To comply with (a)(1)(B) of this section, a writing must provide the following information in the following order:
    1. the aggregate amount of obligations secured by the security interest under which the disposition was made, and, if the amount reflects a rebate of unearned interest or credit service charge, an indication of that fact, calculated as of a specified date
      1. if the secured party takes or receives possession of the collateral after default, not more than 35 days before the secured party takes or receives possession; or
      2. if the secured party takes or receives possession of the collateral before default or does not take possession of the collateral, not more than 35 days before the disposition;
    2. the amount of proceeds of the disposition;
    3. the aggregate amount of the obligations after deducting the amount of proceeds;
    4. the amount, in the aggregate or by type, and types of expenses, including expenses of retaking, holding, preparing for disposition, processing, and disposing of the collateral, and attorney fees secured by the collateral that are known to the secured party and relate to the current disposition;
    5. the amount, in the aggregate or by type, and types of credits, including rebates of interest or credit service charges, to which the obligor is known to be entitled and that are not reflected in the amount in (1) of this subsection; and
    6. the amount of the surplus or deficiency.
  4. A particular phrasing of the explanation is not required. An explanation complying substantially with the requirements of (a) of this section is sufficient even if it includes minor errors that are not seriously misleading.
  5. A debtor or consumer obligor is entitled without charge to one response to a request under this section during any six-month period in which the secured party did not send to the debtor or consumer obligor an explanation under (b)(1) of this section. The secured party may require payment of a charge not exceeding $25 for each additional response.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.617. Rights of transferee of collateral.

  1. A secured party’s disposition of collateral after default
    1. transfers to a transferee for value all of the debtor’s rights in the collateral;
    2. discharges the security interest under which the disposition is made; and
    3. discharges any subordinate security interest or other subordinate lien.
  2. A transferee who acts in good faith takes free of the rights and interests described in (a) of this section even if the secured party fails to comply with this chapter or the requirements of a judicial proceeding.
  3. If a transferee does not take free of the rights and interests described in (a) of this section, the transferee takes the collateral subject to
    1. the debtor’s rights in the collateral;
    2. the security interest or agricultural lien under which the disposition is made; and
    3. any other security interest or other lien.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.618. Rights and duties of certain secondary obligors.

  1. A secondary obligor acquires the rights and becomes obligated to perform the duties of the secured party after the secondary obligor
    1. receives an assignment of a secured obligation from the secured party;
    2. receives a transfer of collateral from the secured party and agrees to accept the rights and assume the duties of the secured party; or
    3. is subrogated to the rights of a secured party with respect to collateral.
  2. An assignment, transfer, or subrogation described in (a) of this section
    1. is not a disposition of collateral under AS 45.29.610 ; and
    2. relieves the secured party of further duties under this chapter.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.619. Transfer of record or legal title.

  1. In this section, “transfer statement” means a record authenticated by a secured party stating
    1. that the debtor has defaulted in connection with an obligation secured by specified collateral;
    2. that the secured party has exercised its post-default remedies with respect to the collateral;
    3. that, by reason of the exercise, a transferee has acquired the rights of the debtor in the collateral; and
    4. the name and mailing address of the secured party, debtor, and transferee.
  2. A transfer statement entitles the transferee to the transfer of record of all rights of the debtor in the collateral specified in the statement in an official filing, recording, registration, or certificate-of-title system covering the collateral. If a transfer statement is presented with the applicable fee and request form to the official or office responsible for maintaining the system, the official or office shall
    1. accept the transfer statement;
    2. promptly amend its records to reflect the transfer; and
    3. if applicable, issue a new appropriate certificate of title in the name of the transferee.
  3. A transfer of the record or legal title to collateral to a secured party under (b) of this section or otherwise is not of itself a disposition of collateral under this chapter and does not of itself relieve the secured party of its duties under this chapter.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.620. Acceptance of collateral in full or partial satisfaction of obligation; compulsory disposition of collateral.

  1. Except as otherwise provided in (g) of this section, a secured party may accept collateral in full or partial satisfaction of the obligation it secures only if
    1. the debtor consents to the acceptance under (c) of this section;
    2. the secured party does not receive, within the time set out in (d) of this section, a notification of objection to the proposal authenticated by
      1. a person to which the secured party was required to send a proposal under AS 45.29.621 ; or
      2. any other person, other than the debtor, holding an interest in the collateral subordinate to the security interest that is the subject of the proposal;
    3. if the collateral is consumer goods, the collateral is not in the possession of the debtor when the debtor consents to the acceptance; and
    4. the provisions of (e) of this section do not require the secured party to dispose of the collateral or the debtor waives the requirement under AS 45.29.624 .
  2. A purported or apparent acceptance of collateral under this section is ineffective unless
    1. the secured party consents to the acceptance in an authenticated record or sends a proposal to the debtor; and
    2. the conditions of (a) of this section are met.
  3. For purposes of this section, a debtor consents to an acceptance of collateral
    1. in partial satisfaction of the obligation it secures only if the debtor agrees to the terms of the acceptance in a record authenticated after default; and
    2. in full satisfaction of the obligation it secures only if the debtor agrees to the terms of the acceptance in a record authenticated after default or the secured party
      1. sends to the debtor after default a proposal that is unconditional or subject only to a condition that collateral not in the possession of the secured party be preserved or maintained;
      2. in the proposal, proposes to accept collateral in full satisfaction of the obligation it secures; and
      3. does not receive a notification of objection authenticated by the debtor within 20 days after the proposal is sent.
  4. To be effective under (a)(2) of this section, a notification of objection must be received by the secured party
    1. in the case of a person to which the proposal was sent under AS 45.29.621 , within 20 days after notification was sent to that person; and
    2. in other cases,
      1. within 20 days after the last notification was sent under AS 45.29.621 ; or
      2. if a notification was not sent, before the debtor consents to the acceptance under (c) of this section.
  5. A secured party that has taken possession of collateral shall dispose of the collateral under AS 45.29.610 within the time specified in (f) of this section if
    1. 60 percent of the cash price has been paid in the case of a purchase money security interest in consumer goods; or
    2. 60 percent of the principal amount of the obligation secured has been paid in the case of a nonpurchase money security interest in consumer goods.
  6. To comply with (e) of this section, the secured party shall dispose of the collateral within
    1. 90 days after taking possession; or
    2. any longer period to which the debtor and all secondary obligors have agreed in an agreement to that effect entered into and authenticated after default.
  7. In a consumer transaction, a secured party may not accept collateral in partial satisfaction of the obligation it secures.

History. (§ 1 ch 113 SLA 2000)

Notes to Decisions

Applied in

Brown v. Baker, 688 P.2d 943 (Alaska 1984) (decided under former AS 45.09.505).

Collateral references. —

Construction and operation of UCC § 9-505(2) authorizing secured party in possession of collateral to retain it in satisfaction of obligation, 55 ALR3d 651.

Sec. 45.29.621. Notification of proposal to accept collateral.

  1. A secured party who desires to accept collateral in full or partial satisfaction of the obligation it secures shall send its proposal to
    1. any person from which the secured party has received, before the debtor consented to the acceptance, an authenticated notification of a claim of an interest in the collateral;
    2. any other secured party or lienholder who, 10 days before the debtor consented to the acceptance, held a security interest in or other lien on the collateral perfected by the filing of a financing statement that
      1. identified the collateral;
      2. was indexed under the debtor’s name as of that date; and
      3. was filed in the office or offices in which to file a financing statement against the debtor covering the collateral as of that date; and
    3. any other secured party who, 10 days before the debtor consented to the acceptance, held a security interest in the collateral perfected by compliance with a statute, regulation, or treaty described in AS 45.29.311(a) .
  2. A secured party who desires to accept collateral in partial satisfaction of the obligation it secures shall send its proposal to any secondary obligor in addition to the persons described in (a) of this section.

History. (§ 1 ch 113 SLA 2000)

Notes to Decisions

Requiring notice of retention is for benefit of debtor. —

The requirement of notice to the debtor by a secured party proposing to retain the chattel in satisfaction of the obligation is obviously for the benefit of the debtor. Moran v. Holman, 514 P.2d 817 (Alaska 1973) (decided under former AS 45.09.505).

Giving notice protects the creditor from a subsequent claim that he should have sold the collateral. Moran v. Holman, 514 P.2d 817 (Alaska 1973) (decided under former AS 45.09.505).

Sec. 45.29.622. Effect of acceptance of collateral.

  1. A secured party’s acceptance of collateral in full or partial satisfaction of the obligation it secures
    1. discharges the obligation to the extent consented to by the debtor;
    2. transfers to the secured party all of a debtor’s rights in the collateral;
    3. discharges the security interest or agricultural lien that is the subject of the debtor’s consent and any subordinate security interest or other subordinate lien; and
    4. terminates any other subordinate interest.
  2. A subordinate interest is discharged or terminated under (a) of this section, even if the secured party fails to comply with this chapter.

History. (§ 1 ch 113 SLA 2000)

Notes to Decisions

Failure to give notice does not prevent showing that collateral retained. —

The creditor’s failure to give notice of intention to retain the collateral in discharge of the debt does not prevent the debtor from showing that the collateral was in fact retained by the creditor and on the basis of such fact he may claim that he is discharged from further liability. Moran v. Holman, 514 P.2d 817 (Alaska 1973) (decided under former AS 45.09.505).

Where depreciating collateral held unduly long period of time. —

When a secured party retains collateral that depreciates in value, such as a motor vehicle, for an unduly long period of time and uses the vehicle as his own, the debtor may validly claim that his obligation has been satisfied. To rule otherwise would permit overreaching and inequitable abuses by some secured parties. Moran v. Holman, 514 P.2d 817 (Alaska 1973) (decided under former AS 45.09.505).

Sec. 45.29.623. Right to redeem collateral.

  1. A debtor, a secondary obligor, or other secured party or lienholder may redeem collateral.
  2. To redeem collateral, a person shall tender
    1. fulfillment of all obligations secured by the collateral; and
    2. the reasonable expenses and attorney fees described in AS 45.29.615(a)(1) .
  3. A redemption may occur at any time before a secured party has
    1. collected collateral under AS 45.29.607 ;
    2. disposed of collateral or entered into a contract for its disposition under AS 45.29.610 ; or
    3. accepted collateral in full or partial satisfaction of the obligation it secures under AS 45.29.622 .

History. (§ 1 ch 113 SLA 2000)

Notes to Decisions

Cited in

Crowley v. N. Aviation, LLC, 441 P.3d 407 (Alaska 2019).

Sec. 45.29.624. Waiver.

  1. A debtor or secondary obligor may waive the right to notification of disposition of collateral under AS 45.29.611 only by an agreement to that effect entered into and authenticated after default.
  2. A debtor may waive the right to require disposition of collateral under AS 45.29.620(e) only by an agreement to that effect entered into and authenticated after default.
  3. Except in a consumer goods transaction, a debtor or secondary obligor may waive the right to redeem collateral under AS 45.29.623 only by an agreement to that effect entered into and authenticated after default.

History. (§ 1 ch 113 SLA 2000)

Sec. 45.29.625. Remedies for secured party’s failure to comply with chapter.

  1. If it is established that a secured party is not proceeding in accordance with this chapter, a court may order or restrain collection, enforcement, or disposition of collateral on appropriate terms and conditions.
  2. Subject to (c), (d), and (f) of this section, a person is liable for damages in the amount of any loss caused by a failure to comply with this chapter. Loss caused by a failure to comply may include loss resulting from the debtor’s inability to obtain, or increased costs of, alternative financing.
  3. Except as otherwise provided in AS 45.29.628 ,
    1. a person who, at the time of the failure, was a debtor or an obligor or held a security interest in or other lien on the collateral may recover damages under (b) of this section for its loss; and
    2. if the collateral is consumer goods, a person who was a debtor or secondary obligor at the time a secured party failed to comply with AS 45.29.601 45.29.628 may recover for that failure in any event an amount not less than the credit service charge plus 10 percent of the principal amount of the obligation or the time-price differential plus 10 percent of the cash price.
  4. A debtor whose deficiency is eliminated under AS 45.29.626 may recover damages for the loss of any surplus. However, a debtor or secondary obligor whose deficiency is eliminated or reduced under AS 45.29.626 may not otherwise recover under (b) of this section for noncompliance with the provisions of AS 45.29.601 45.29.628 relating to collection, enforcement, disposition, or acceptance.
  5. In addition to damages recoverable under (b) of this section, the debtor, consumer obligor, or person named as a debtor in a filed record, as applicable, may recover $500 in each case from a person that
    1. fails to comply with AS 45.29.208 ;
    2. fails to comply with AS 45.29.209 ;
    3. files a record that the person is not entitled to file under AS 45.29.509(a) ;
    4. fails to cause the secured party of record to file or send a termination statement as required by AS 45.29.513(a) or (c);
    5. fails to comply with AS 45.29.616(b)(1) and whose failure is part of a pattern, or consistent with a practice, of noncompliance; or
    6. fails to comply with AS 45.29.616(b)(2) .
  6. A debtor or consumer obligor may recover damages under (b) of this section and, in addition, $500 in each case from a person who, without reasonable cause, fails to comply with a request under AS 45.29.210 . A recipient of a request under AS 45.29.210 who never claimed an interest in the collateral or obligations that are the subject of a request under that section has a reasonable excuse for failure to comply with the request within the meaning of this subsection.
  7. If a secured party fails to comply with a request regarding a list of collateral or a statement of account under AS 45.29.210 , the secured party may claim a security interest only as shown on the list or statement included in the request as against a person who is reasonably misled by the failure.

History. (§ 1 ch 113 SLA 2000)

Notes to Decisions

Overbroad financing statement. —

Where the seller sold two business to the buyer in two separate transactions, the parties entered into a security agreement that secured the promissory note; the seller filed a financing statement covering the assets and inventory. Because the buyer was not harmed by the overbroad financing statement, the trial court erred by awarding it damages after holding that the seller used his overbroad financing statement to “leverage” a $60,000 settlement payment as part of the resale of one of the businesses. Kazan v. Dough Boys, Inc., 201 P.3d 508 (Alaska 2009).

Sec. 45.29.626. Action in which deficiency or surplus is in issue.

  1. In an action arising from a transaction, other than a consumer transaction, in which the amount of a deficiency or surplus is in issue, the following rules apply:
    1. a secured party need not prove compliance with the provisions of AS 45.29.601 45.29.628 relating to collection, enforcement, disposition, or acceptance unless the debtor or secondary obligor places the secured party’s compliance in issue;
    2. if the secured party’s compliance is placed in issue, the secured party has the burden of establishing that the collection, enforcement, disposition, or acceptance was conducted in compliance with the provisions of AS 45.29.601 45.29.628 ;
    3. except as otherwise provided in AS 45.29.628, if a secured party fails to prove that the collection, enforcement, disposition, or acceptance was conducted in compliance with the provisions of AS 45.29.601 — 45.29.628 relating to collection, enforcement, disposition, or acceptance, the liability of a debtor or secondary obligor for a deficiency is limited to an amount by which the sum of the secured obligation, expenses, and attorney fees exceeds the greater of
      1. the proceeds of the collection, enforcement, disposition, or acceptance; or
      2. the amount of proceeds that would have been realized had the noncomplying secured party proceeded in compliance with the provisions of AS 45.29.601 — 45.29.628 relating to collection, enforcement, disposition, or acceptance;
    4. for purposes of (3)(B) of this subsection, the amount of proceeds that would have been realized is equal to the sum of the secured obligation, expenses, and attorney fees unless the secured party proves that the amount is less than that sum;
    5. if a deficiency or surplus is calculated under AS 45.29.615(f) , the debtor or obligor has the burden of establishing that the amount of proceeds of the disposition is significantly below the range of prices that a complying disposition to a person other than the secured party, a person related to the secured party, or a secondary obligor would have brought.
  2. The limitation of the rules in (a) of this section to transactions other than consumer transactions is intended to leave to the court the determination of the proper rules in consumer transactions. The court may not infer from that limitation the nature of the proper rule in consumer transactions and may continue to apply established approaches.

History. (§ 1 ch 113 SLA 2000)

Cross references. —

For the effect of (a)(3) and (4) of this section on Rule 79, Alaska Rules of Civil Procedure, see sec. 32, ch. 113, SLA 2000 in the 2000 Temporary & Special Acts.

Notes to Decisions

Secured party must establish that every aspect of the sale was commercially reasonable. Kobuk Eng'g & Contracting Servs. v. Superior Tank & Constr. Co-Alaska, 568 P.2d 1007 (Alaska 1977) (decided under former AS 45.09.504).

The burden of proving the commercial reasonableness of a sale was on the secured party, especially where the creditor purchased the property. Queen of the N., Inc. v. LeGrue, 582 P.2d 144 (Alaska 1978) (decided under former AS 45.09.504).

Noncompliance with former AS 45.09.504(c). —

Where noncompliance with the notice of sale provision of former AS 45.09.504(c) has been shown, the burden of proving that the market value of the collateral was received at the sale is upon the secured party. Weaver v. O'Meara Motor Co., 452 P.2d 87 (Alaska 1969); Hoch v. Ellis, 627 P.2d 1060 (Alaska 1981) (decided under former AS 45.09.504).

When the secured party had failed to comply with the notice provisions of former AS 45.09.504(c), the burden of proving adequate price and commercial reasonableness is on the secured party. Kobuk Eng'g & Contracting Servs. v. Superior Tank & Constr. Co-Alaska, 568 P.2d 1007 (Alaska 1977) (decided under former AS 45.09.504).

If a sale was deficient with respect to either notice or commercial reasonableness, then a burden is placed upon the secured party to rebut the presumption that the fair market value of the collateral was at least equal to the amount of the outstanding debt. Hoch v. Ellis, 627 P.2d 1060 (Alaska 1981) (decided under former AS 45.09.504).

Rebutting presumption that collateral’s value equals outstanding debt. —

The burden is on the secured party to prove by clear and convincing evidence the value of the collateral. Hoch v. Ellis, 627 P.2d 1060 (Alaska 1981) (decided under former AS 45.09.504).

When it is proven by clear and convincing evidence that the value of the collateral is less than the debt, but the exact value of the collateral is not proven to the same standard, the court should proceed to determine the value of the collateral. The burden of proof as to this question, in the sense of which party bears the risk of losing if the trier of fact is not persuaded, can be said to reside with the creditor under a preponderance of the evidence standard, but burden of proof on this point will seldom, if ever, be important because before the point can be reached the evidence must have shown to a clear and convincing standard that the value is less than the debt. Typically this will be shown by introduction of evidence of a specific value or of a range of values some part of which at least the court has found persuasive. United Bank Alaska v. Dischner, 685 P.2d 90 (Alaska 1984) (decided under former AS 45.09.504).

A creditor can rebut the presumption of equality by providing the exact value of the collateral where that value is less than the value of the outstanding debt, but the presumption can also be rebutted by proof that the value of the collateral is less than the amount of the outstanding debt. United Bank Alaska v. Dischner, 685 P.2d 90 (Alaska 1984) (decided under former AS 45.09.504).

Failure to rebut presumption of collateral’s value. —

If the secured party fails to rebut the presumption that the fair market value of the collateral was at least equal to the amount of the outstanding debt, then the presumption leads to the conclusion that the entire debt is discharged. Hoch v. Ellis, 627 P.2d 1060 (Alaska 1981) (decided under former AS 45.09.504).

Stated in

Crowley v. N. Aviation, LLC, 441 P.3d 407 (Alaska 2019).

Collateral references. —

Failure of secured party to make “commercially reasonable” disposition of collateral under UCC § 9-504(3) as bar to deficiency judgment, 10 ALR4th 413.

Value of trade-in taken on sale of collateral for purposes of computing surplus or deficiency, 72 ALR4th 1128.

Sec. 45.29.627. Determination of whether conduct was commercially reasonable.

  1. The fact that a greater amount could have been obtained by a collection, enforcement, disposition, or acceptance at a different time or in a different method from that selected by the secured party is not of itself sufficient to preclude the secured party from establishing that the collection, enforcement, disposition, or acceptance was made in a commercially reasonable manner.
  2. A disposition of collateral is made in a commercially reasonable manner if the disposition is made
    1. in the usual manner on any recognized market;
    2. at the price current in any recognized market at the time of the disposition; or
    3. otherwise in conformity with reasonable commercial practices among dealers in the type of property that was the subject of the disposition.
  3. A collection, enforcement, disposition, or acceptance is commercially reasonable if it has been approved
    1. in a judicial proceeding;
    2. by a bona fide creditors’ committee;
    3. by a representative of creditors; or
    4. by an assignee for the benefit of creditors.
  4. Approval under (c) of this section need not be obtained, and lack of approval does not mean that the collection, enforcement, disposition, or acceptance is not commercially reasonable.

History. (§ 1 ch 113 SLA 2000)

Notes to Decisions

“Commercially reasonable” sale. —

Ordinarily, the secured creditor establishes that the duty to conduct a sale of the collateral, after a default, in a “commercially reasonable” manner has been fulfilled by showing that the collateral was sold for its fair market value. Kobuk Eng'g & Contracting Servs. v. Superior Tank & Constr. Co-Alaska, 568 P.2d 1007 (Alaska 1977) (decided under former AS 45.09.504).

Determination of whether a sale at retail or wholesale is commercially reasonable depends upon the circumstances in each case and is therefore a question of fact. Dischner v. United Bank Alaska, 725 P.2d 488 (Alaska 1986) (decided under former AS 45.09.504).

Private sale of a tractor was prohibited by former AS 45.09.504(c), and thus was commercially unreasonable, because a tractor is not customarily sold in a recognized market and is not the subject of widely distributed standard price quotations. Northern Commer. Co. v. Cobb, 778 P.2d 205 (Alaska 1989) (decided under former AS 45.09.504).

Collateral references. —

What is “commercially reasonable” disposition of collateral required by UCC § 9-504(3), 7 ALR4th 308.

Sec. 45.29.628. Nonliability and limitation on liability of secured party; liability of secondary obligor.

  1. Unless a secured party knows that a person is a debtor or obligor, knows the identity of the person, and knows how to communicate with the person,
    1. the secured party is not liable to the person, or to a secured party or lienholder that has filed a financing statement against the person, for failure to comply with this chapter; and
    2. the secured party’s failure to comply with this chapter does not affect the liability of the person for a deficiency.
  2. A secured party is not liable because of its status as secured party
    1. to a person who is a debtor or obligor unless the secured party knows
      1. that the person is a debtor or obligor;
      2. the identity of the person; and
      3. how to communicate with the person; or
    2. to a secured party or lienholder that has filed a financing statement against a person unless the secured party knows
      1. that the person is a debtor; and
      2. the identity of the person.
  3. A secured party is not liable to a person, and a person’s liability for a deficiency is not affected, because of an act or omission arising out of the secured party’s reasonable belief that a transaction is not a consumer goods transaction or a consumer transaction or that goods are not consumer goods if the secured party’s belief is based on its reasonable reliance on
    1. a debtor’s representation concerning the purpose for which collateral was to be used, acquired, or held; or
    2. an obligor’s representation concerning the purpose for which a secured obligation was incurred.
  4. A secured party is not liable to a person under AS 45.29.625(c)(2) for its failure to comply with AS 45.29.616 .
  5. A secured party is not liable under AS 45.29.625(c)(2) more than once with respect to any one secured obligation.

History. (§ 1 ch 113 SLA 2000)

Article 7. Transitional Provisions.

Sec. 45.29.702. Savings clause.

  1. Except as otherwise provided in AS 45.29.702 45.29.709 , this chapter applies to a transaction or lien within the scope of this chapter, even if the transaction or lien was entered into or created before July 1, 2001.
  2. Except as otherwise provided in AS 45.29.703 45.29.709 ,
    1. transactions and liens that were not governed by former AS 45.09, were validly entered into or created before July 1, 2001, and would be subject to this chapter if they had been entered into or created on or after July 1, 2001, and the rights, duties, and interests flowing from those transactions and liens remain valid on and after July 1, 2001; and
    2. the transactions and liens may be terminated, completed, consummated, and enforced as required or permitted under this chapter or by the law that otherwise would apply if this chapter had not taken effect.

History. (§ 1 ch 113 SLA 2000; am § 23 ch 22 SLA 2001)

Cross references. —

See also AS 45.29.802 and 45.29.811 .

Sec. 45.29.703. Security interest perfected before effective date.

  1. A security interest that is enforceable June 30, 2001, and would have priority over the rights of a person who becomes a lien creditor June 30, 2001, is a perfected security interest under this chapter if, on July 1, 2001, the applicable requirements for enforceability and perfection under this chapter are satisfied without further action.
  2. Except as otherwise provided in AS 45.29.705 , if, on June 30, 2001, a security interest is enforceable and would have priority over the rights of a person who becomes a lien creditor June 30, 2001, but the applicable requirements for enforceability or perfection under this chapter are not satisfied on July 1, 2001, the security interest
    1. is a perfected security interest until July 1, 2002;
    2. remains enforceable on and after July 1, 2002, only if the security interest becomes enforceable under AS 45.29.203 before July 1, 2002; and
    3. remains perfected on and after July 1, 2002, only if the applicable requirements for perfection under this chapter are satisfied before July 1, 2002.

History. (§ 1 ch 113 SLA 2000)

Cross references. —

See also AS 45.29.803 .

Sec. 45.29.704. Security interest unperfected before effective date.

A security interest that is enforceable June 30, 2001, but that would be subordinate to the rights of a person who becomes a lien creditor June 30, 2001,

  1. remains an enforceable security interest until July 1, 2002;
  2. remains enforceable on and after July 1, 2002, if the security interest becomes enforceable under AS 45.29.203 on July 1, 2001, or before July 1, 2002; and
  3. becomes perfected
    1. without further action on July 1, 2001, if the applicable requirements for perfection under this chapter are satisfied before July 1, 2001; or
    2. when the applicable requirements for perfection are satisfied if the requirements are satisfied on or after July 1, 2001.

History. (§ 1 ch 113 SLA 2000)

Cross references. —

See also AS 45.29.804 .

Sec. 45.29.705. Effectiveness of action taken before effective date.

  1. If action, other than the filing of a financing statement, is taken before July 1, 2001, and the action would have resulted in priority of a security interest over the rights of a person who becomes a lien creditor had the security interest become enforceable before July 1, 2001, the action is effective to perfect a security interest that attaches under this chapter before July 1, 2002. An attached security interest becomes unperfected on July 1, 2002, unless the security interest becomes a perfected security interest under this chapter before July 1, 2002.
  2. The filing of a financing statement before July 1, 2001, is effective to perfect a security interest to the extent the filing would satisfy the applicable requirements for perfection under this chapter.
  3. This chapter does not render ineffective an effective financing statement that, before July 1, 2001, is filed and satisfies the applicable requirements for perfection under the law of the jurisdiction governing perfection as provided in former AS 45.09.103. However, except as otherwise provided in (d) and (e) of this section and AS 45.29.706 , the financing statement ceases to be effective at the earlier of
    1. the time the financing statement would have ceased to be effective under the law of the jurisdiction in which it is filed; or
    2. June 30, 2006.
  4. The filing of a continuation statement on or after July 1, 2001, does not continue the effectiveness of the financing statement filed before July 1, 2001. However, upon the timely filing of a continuation statement on or after July 1, 2001, and in accordance with the law of the jurisdiction governing perfection as provided in AS 45.29.301 45.29.342 , the effectiveness of a financing statement filed in the same office in that jurisdiction before July 1, 2001, continues for the period provided by the law of that jurisdiction.
  5. The provisions of (c)(2) of this section apply to a financing statement that, before July 1, 2001, is filed against a transmitting utility and satisfies the applicable requirements for perfection under the law of the jurisdiction governing perfection as provided in former AS 45.09.103 only to the extent that AS 45.29.301 45.29.342 provides that the law of a jurisdiction other than the jurisdiction in which the financing statement is filed governs perfection of a security interest in collateral covered by the financing statement.
  6. A financing statement that includes a financing statement filed before July 1, 2001, and a continuation statement filed on or after July 1, 2001, is effective only to the extent that it satisfies the requirements of AS 45.29.501 45.29.525 for an initial financing statement.

History. (§ 1 ch 113 SLA 2000)

Cross references. —

See also AS 45.29.805 .

Administrative Code. —

For document recording and filing, see 11 AAC 6.

Sec. 45.29.706. When initial financing statement suffices to continue effectiveness of financing statement.

  1. The filing of an initial financing statement in the office specified in AS 45.29.501 continues the effectiveness of a financing statement filed before July 1, 2001, if
    1. the filing of an initial financing statement in that office would be effective to perfect a security interest under this chapter;
    2. the pre-effective date financing statement was filed in an office in another state or another office in this state; and
    3. the initial financing statement satisfies (b) of this section.
  2. The filing of an initial financing statement under (a) of this section continues the effectiveness of the pre-effective date financing statement if the initial financing statement is filed
    1. before July 1, 2001, for the period provided in former AS 45.09.403 with respect to a financing statement; and
    2. on or after July 1, 2001, for the period provided in AS 45.29.515 with respect to an initial financing statement.
  3. To be effective for purposes of (a) of this section, an initial financing statement must
    1. satisfy the requirements of AS 45.29.501 45.29.524 for an initial financing statement;
    2. identify the pre-effective date financing statement by indicating the office in which the financing statement was filed and providing the dates of filing and file numbers, if any, of the financing statement and of the most recent continuation statement filed with respect to the financing statement; and
    3. indicate that the pre-effective date financing statement remains effective.

History. (§ 1 ch 113 SLA 2000)

Cross references. —

See also AS 45.29.806 .

Administrative Code. —

For document recording and filing, see 11 AAC 6.

Sec. 45.29.707. Amendment of pre-effective date financing statement.

  1. On or after July 1, 2001, a person may add or delete collateral covered by, continue or terminate the effectiveness of, or otherwise amend the information provided in, a pre-effective date financing statement only in accordance with the law of the jurisdiction governing perfection as provided in AS 45.29.301 45.29.342 . However, the effectiveness of a pre-effective date financing statement also may be terminated in accordance with the law of the jurisdiction in which the financing statement is filed.
  2. Except as otherwise provided in (c) of this section, if the law of this state governs perfection of a security interest, the information in a pre-effective date financing statement may be amended on or after July 1, 2001, only if
    1. the pre-effective date financing statement and an amendment are filed in the office specified in AS 45.29.501 ;
    2. an amendment is filed in the office specified in AS 45.29.501 concurrently with, or after the filing in that office of, an initial financing statement that satisfies AS 45.29.706(c) ; or
    3. an initial financing statement that provides the information as amended and satisfies AS 45.29.706(c) is filed in the office specified in AS 45.29.501.
  3. If the law of this state governs perfection of a security interest, the effectiveness of a pre-effective date financing statement may be continued only under AS 45.29.705(d) and (f) or 45.29.706 .
  4. Whether or not the law of this state governs perfection of a security interest, the effectiveness of a pre-effective date financing statement filed in this state may be terminated on or after July 1, 2001, by filing a termination statement in the office in which the pre-effective date financing statement is filed, unless an initial financing statement that satisfies AS 45.29.706(c) has been filed in the office specified by the law of the jurisdiction governing perfection as provided in AS 45.29.301 45.29.342 as the office in which to file a financing statement.
  5. In this section, “pre-effective date financing statement” means a financing statement filed before July 1, 2001.

History. (§ 1 ch 113 SLA 2000)

Cross references. —

See also AS 45.29.807 .

Administrative Code. —

For document recording and filing, see 11 AAC 6.

Sec. 45.29.708. Persons entitled to file initial financing statement or continuation statement.

A person may file an initial financing statement or a continuation statement under AS 45.29.702 45.29.709 if

  1. the secured party of record authorizes the filing; and
  2. the filing is necessary under AS 45.29.702 45.29.709 to
    1. continue the effectiveness of a financing statement filed before July 1, 2001; or
    2. perfect or continue the perfection of a security interest.

History. (§ 1 ch 113 SLA 2000)

Cross references. —

See also AS 45.29.808 .

Administrative Code. —

For document recording and filing, see 11 AAC 6.

Sec. 45.29.709. Priority.

  1. This chapter determines the priority of conflicting claims to collateral. However, if the relative priorities of the claims were established before July 1, 2001, former AS 45.09 determines priority.
  2. For purposes of AS 45.29.322(a) , the priority of a security interest that becomes enforceable under AS 45.29.203 dates from July 1, 2001, if the security interest is perfected under this chapter by the filing of a financing statement before July 1, 2001, that would not have been effective to perfect the security interest under former AS 45.09. This subsection does not apply to conflicting security interests each of which is perfected by the filing of such a financing statement.

History. (§ 1 ch 113 SLA 2000)

Cross references. —

See also AS 45.29.809 .

Article 8. Transitional Provisions for 2013 Amendments.

Sec. 45.29.802. Applicability.

Except as otherwise provided in AS 45.29.803 45.29.807 , AS 45.29.102(a)(8) , (13), (61), (85), and (88), 45.29.105 , 45.29.307(f) , 45.29.311(a) , 45.29.316(h) and (i), 45.29.317(b) and (d), 45.29.326 , 45.29.406(e) , 45.29.408(b) , 45.29.503(a) , (b), and (f) — (h), 45.29.507(c) , 45.29.515(f) , 45.29.516(b) , 45.29.518 , and 45.29.607(b) , as those provisions read on July 1, 2013, apply to a transaction or lien within the scope of AS 45.29.102(a)(8) , (13), (61), (85), and (88), 45.29.105 , 45.29.307(f) , 45.29.311(a) , 45.29.316(h) and (i), 45.29.317(b) and (d), 45.29.326 , 45.29.406(e) , 45.29.408(b) , 45.29.503(a) , (b), and (f) — (h), 45.29.507(c) , 45.29.515(f) , 45.29.516(b) , 45.29.518 , and 45.29.607(b) , as those provisions read on July 1, 2013, even if the transaction or lien was entered into or created before July 1, 2013.

History. (§ 26 ch 64 SLA 2013)

Revisor’s notes. —

Enacted as sec. 26, ch. 64, SLA 2013, and codified in 2013. Section 26, ch. 64, SLA 2013 reads: “Except as otherwise provided in secs. 27 — 31 of this Act, secs. 3 — 25 of this Act apply to a transaction or lien within the scope of secs. 3 — 25 of this Act, even if the transaction or lien was entered into or created before July 1, 2013.”

Cross references. —

See also AS 45.29.702(a) .

Sec. 45.29.803. Security interest perfected before July 1, 2013.

  1. A security interest that is a perfected security interest immediately before July 1, 2013, is a perfected security interest under AS 45.29.101 45.29.709 , as those sections read on July 1, 2013, if, immediately before July 1, 2013, the applicable requirements for attachment and perfection under AS 45.29.101 45.29.709 , as those sections read on July 1, 2013, are satisfied without further action.
  2. Except as otherwise provided in AS 45.29.805 , if, immediately before July 1, 2013, a security interest is a perfected security interest, but the applicable requirements for perfection under AS 45.29.101 45.29.709 , as those sections read on July 1, 2013, are not satisfied on or before June 30, 2013, the security interest remains perfected on and after July 1, 2013, only if the applicable requirements for perfection under AS 45.29.101 45.29.709 , as those sections read on July 1, 2013, are satisfied not later than July 1, 2014.

History. (§ 27 ch 64 SLA 2013)

Revisor’s notes. —

Enacted as sec. 27, ch. 64, SLA 2013, and codified in 2013. Section 27, ch. 64, SLA 2013 reads: “Transition: Security interest perfected before effective date. (a) A security interest that is a perfected security interest immediately before July 1, 2013, is a perfected security interest under AS 45.29, as amended by secs. 3 — 25 of this Act, if, immediately before July 1, 2013, the applicable requirements for attachment and perfection under AS 45.29, as amended by secs. 3 — 25 of this Act, are satisfied without further action.

“(b) Except as otherwise provided in sec. 29 of this Act, if, immediately before July 1, 2013, a security interest is a perfected security interest, but the applicable requirements for perfection under AS 45.29, as amended by secs. 3 — 25 of this Act, are not satisfied on or before June 30, 2013, the security interest remains perfected on and after July 1, 2013, only if the applicable requirements for perfection under AS 45.29, as amended by secs. 3 — 25 of this Act, are satisfied not later than July 1, 2014.”

Cross references. —

See also AS 45.29.703 .

Sec. 45.29.804. Security interest unperfected before July 1, 2013.

A security interest that is an unperfected security interest on June 30, 2013, becomes a perfected security interest

  1. without further action on July 1, 2013, if the applicable requirements for perfection under AS 45.29.101 45.29.709 , as those sections read on July 1, 2013, are satisfied on or before June 30, 2013; or
  2. when the applicable requirements for perfection are satisfied if the requirements are satisfied on or after July 1, 2013.

History. (§ 28 ch 64 SLA 2013)

Revisor’s notes. —

Enacted as sec. 28, ch. 64, SLA 2013, and codified in 2013. Section 28, ch. 64, SLA 2013 reads: “Transition: Security interest unperfected before effective date. A security interest that is an unperfected security interest on June 30, 2013, becomes a perfected security interest

“(1) without further action on July 1, 2013, if the applicable requirements for perfection under AS 45.29, as amended by secs. 3 — 25 of this Act, are satisfied on or before June 30, 2013; or

“(2) when the applicable requirements for perfection are satisfied if the requirements are satisfied on or after July 1, 2013.”

Cross references. —

See also AS 45.29.704 .

Sec. 45.29.805. Effectiveness of action taken before July 1, 2013.

  1. The filing of a financing statement before July 1, 2013, is effective to perfect a security interest to the extent the filing would satisfy the applicable requirements for perfection under AS 45.29.101 45.29.709 , as those sections read on July 1, 2013.
  2. AS 45.29.102(a)(8) , (13), (61), (85), and (88), AS 45.29.105 , 45.29.307(f) , 45.29.311(a) , 45.29.316(h) and (i), 45.29.317(b) and (d), 45.29.326 , 45.29.406(e) , 45.29.408(b) , 45.29.503(a) , (b), and (f) — (h), 45.29.507(c) , 45.29.515(f) , 45.29.516(b) , 45.29.518 , and 45.29.607(b) , as those provisions read on July 1, 2013, do not render ineffective an effective financing statement that, before July 1, 2013, is filed and satisfies the applicable requirements for perfection under the law of the jurisdiction governing perfection as provided in this chapter, as this chapter read on June 30, 2013.  However, except as otherwise provided in (c) and (d) of this section and AS 45.29.806 , the financing statement ceases to be effective,
    1. if the financing statement is filed in this state, at the time the financing statement would have ceased to be effective had AS 45.29.102(a)(8) , (13), (61), and (88), AS 45.29.105 , 45.29.307(f) , 45.29.311(a) , 45.29.317(b) and (d), 45.29.326 , 45.29.406(e) , 45.29.408(b) , 45.29.503(a) and (b), 45.29.507(c) , 45.29.515(f) , 45.29.516(b) , 45.29.518 , and 45.29.607(b) , continued to read as those provisions read on June 30, 2013; or
    2. if the financing statement is filed in another jurisdiction, at the earlier of
      1. the time the financing statement would have ceased to be effective under the law of that jurisdiction; or
      2. June 30, 2018.
  3. The filing of a continuation statement on or after July 1, 2013, does not continue the effectiveness of a financing statement filed before July 1, 2013. However, upon the timely filing of a continuation statement on or after July 1, 2013, and in accordance with the law of the jurisdiction governing perfection as provided in AS 45.29.101 45.29.709 , as those sections read on July 1, 2013, the effectiveness of a financing statement filed in the same office in that jurisdiction before July 1, 2013, continues for the period provided by the law of that jurisdiction.
  4. The provisions of (b)(2)(B) of this section apply to a financing statement that, before July 1, 2013, is filed against a transmitting utility and satisfies the applicable requirements for perfection under the law of the jurisdiction governing perfection as provided in this chapter, as this chapter read on June 30, 2013, only to the extent that AS 45.29.101 45.29.709 , as those sections read on July 1, 2013, provide that the law of a jurisdiction other than the jurisdiction in which the financing statement is filed governs perfection of a security interest in collateral covered by the financing statement.
  5. A financing statement that includes a financing statement filed before July 1, 2013, and a continuation statement filed on or after July 1, 2013, is effective only to the extent that it satisfies the requirements of AS 45.29.503(a) , (b), and (f) — (h), 45.29.507(c) , 45.29.515(f) , 45.29.516(b) , and 45.29.518 , as those provisions read on July 1, 2013, for an initial financing statement. If a financing statement indicates that the debtor is a decedent’s estate, the financing statement indicates that the collateral is being administered by a personal representative within the meaning of AS 45.29.503(a) (2), as that paragraph read on July 1, 2013.  If a financing statement indicates that the debtor is a trust or is a trustee acting with respect to property held in trust, the financing statement indicates that the collateral is held in a trust within the meaning of AS 45.29.503(a)(3) , as that paragraph read on July 1, 2013.

History. (§ 29 ch 64 SLA 2013)

Revisor’s notes. —

Enacted as sec. 29, ch. 64, SLA 2013, and codified in 2013. Section 29, ch. 64, SLA 2013 reads: “Transition: Effectiveness of action taken before effective date. (a) The filing of a financing statement before July 1, 2013, is effective to perfect a security interest to the extent the filing would satisfy the applicable requirements for perfection under AS 45.29, as amended by secs. 3 — 25 of this Act.

“(b) Sections 3 — 25 of this Act do not render ineffective an effective financing statement that, before July 1, 2013, is filed and satisfies the applicable requirements for perfection under the law of the jurisdiction governing perfection as provided in AS 45.29, as it existed before being amended by secs. 3 — 25 of this Act. However, except as otherwise provided in (c) and (d) of this section and sec. 30 of this Act, the financing statement ceases to be effective,

“(1) if the financing statement is filed in this state, at the time the financing statement would have ceased to be effective had secs. 3 — 25 of this Act not taken effect; or

“(2) if the financing statement is filed in another jurisdiction, at the earlier of

“(A) the time the financing statement would have ceased to be effective under the law of that jurisdiction; or

“(B) June 30, 2018.

“(c) The filing of a continuation statement on or after July 1, 2013, does not continue the effectiveness of a financing statement filed before July 1, 2013. However, upon the timely filing of a continuation statement on or after July 1, 2013, and in accordance with the law of the jurisdiction governing perfection as provided in AS 45.29, as amended by secs. 3 — 25 of this Act, the effectiveness of a financing statement filed in the same office in that jurisdiction before July 1, 2013, continues for the period provided by the law of that jurisdiction.

“(d) The provisions of (b)(2)(B) of this section apply to a financing statement that, before July 1, 2013, is filed against a transmitting utility and satisfies the applicable requirements for perfection under the law of the jurisdiction governing perfection as provided in AS 45.29, as it existed before being amended by secs. 3 — 25 of this Act, only to the extent that AS 45.29, as amended by secs. 3 — 25 of this Act, provides that the law of a jurisdiction other than the jurisdiction in which the financing statement is filed governs perfection of a security interest in collateral covered by the financing statement.

“(e) A financing statement that includes a financing statement filed before July 1, 2013, and a continuation statement filed on or after July 1, 2013, is effective only to the extent that it satisfies the requirements of AS 45.29.503(a) , as repealed and reenacted by sec. 17 of this Act, AS 45.29.503(b) , as amended by sec. 18 of this Act, AS 45.29.503(f) — (h), added by sec. 19 of this Act, AS 45.29.507(c) , as amended by sec. 20 of this Act, AS 45.29.515(f) , as amended by sec. 21 of this Act, AS 45.29.516(b) , as amended by sec. 22 of this Act, AS 45.29.518 , as amended by sec. 23 of this Act, and AS 45.29.518 (d) and (e), added by sec. 24 of this Act, for an initial financing statement. If a financing statement indicates that the debtor is a decedent’s estate, the financing statement indicates that the collateral is being administered by a personal representative within the meaning of AS 45.29.503(a) (2), as repealed and reenacted by sec. 17 of this Act. If a financing statement indicates that the debtor is a trust or is a trustee acting with respect to property held in trust, the financing statement indicates that the collateral is held in a trust within the meaning of AS 45.29.503(a)(3) , as repealed and reenacted by sec. 17 of this Act.”

Cross references. —

See also AS 45.29.705 .

Sec. 45.29.806. When initial financing statement suffices to continue effectiveness of financing statement.

  1. The filing of an initial financing statement in the office specified in AS 45.29.501 continues the effectiveness of a financing statement filed before July 1, 2013, if
    1. the filing of an initial financing statement in that office would be effective to perfect a security interest under AS 45.29.101 45.29.709 , as those sections read on July 1, 2013;
    2. the financing statement filed before July 1, 2013, was filed in an office in another state; and
    3. the initial financing statement satisfies (c) of this section.
  2. The filing of an initial financing statement under (a) of this section continues the effectiveness of the financing statement filed before July 1, 2013,
    1. if the initial financing statement is filed before July 1, 2013, for the period provided in AS 45.29.515 , as that section existed before July 1, 2013, with respect to an initial financing statement; and
    2. if the initial financing statement is filed on or after July 1, 2013, for the period provided in AS 45.29.515 , as that section existed before July 1, 2013, with respect to an initial financing statement.
  3. To be effective for purposes of (a) of this section, an initial financing statement must
    1. satisfy the requirements of AS 45.29.503(a) , (b), and (f) — (h), 45.29.507(c) , 45.29.515(f) , 45.29.516(b) , and 45.29.518 , as those provisions read on July 1, 2013, for an initial financing statement;
    2. identify the financing statement filed before July 1, 2013, by indicating the office in which the financing statement was filed and providing the dates of filing and file numbers, if any, of the financing statement and of the most recent continuation statement filed with respect to the financing statement; and
    3. indicate that the financing statement filed before July 1, 2013, remains effective.

History. (§ 30 ch 64 SLA 2013)

Revisor’s notes. —

Enacted as sec. 30, ch. 64, SLA 2013, and codified in 2013. Section 30, ch. 64, SLA 2013 reads: “Transition: When initial financing statement suffices to continue effectiveness of financing statement. (a) The filing of an initial financing statement in the office specified in AS 45.29.501 continues the effectiveness of a financing statement filed before July 1, 2013, if

“(1) the filing of an initial financing statement in that office would be effective to perfect a security interest under AS 45.29, as amended by secs. 3 — 25 of this Act;

“(2) the financing statement filed before July 1, 2013, was filed in an office in another state; and

“(3) the initial financing statement satisfies (c) of this section.

“(b) The filing of an initial financing statement under (a) of this section continues the effectiveness of the financing statement filed before July 1, 2013,

“(1) if the initial financing statement is filed before July 1, 2013, for the period provided in AS 45.29.515 , as that section existed before July 1, 2013, with respect to an initial financing statement; and

“(2) if the initial financing statement is filed on or after July 1, 2013, for the period provided in AS 45.29.515 , as that section existed before July 1, 2013, with respect to an initial financing statement.

“(c) To be effective for purposes of (a) of this section, an initial financing statement must

“(1) satisfy the requirements of AS 45.29.503(a) , as repealed and reenacted by sec. 17 of this Act, AS 45.29.503(b) , as amended by sec. 18 of this Act, AS 45.29.503(f) — (h), added by sec. 19 of this Act, AS 45.29.507(c) , as amended by sec. 20 of this Act, AS 45.29.515(f) , as amended by sec. 21 of this Act, AS 45.29.516(b) , as amended by sec. 22 of this Act, AS 45.29.518 , as amended by sec. 23 of this Act, and AS 45.29.518 (d) and (e), added by sec. 24 of this Act, for an initial financing statement;

“(2) identify the financing statement filed before July 1, 2013, by indicating the office in which the financing statement was filed and providing the dates of filing and file numbers, if any, of the financing statement and of the most recent continuation statement filed with respect to the financing statement; and

“(3) indicate that the financing statement filed before July 1, 2013, remains effective.”

Cross references. —

See also AS 45.29.706 .

Sec. 45.29.807. Amendment of pre-effective-date financing statement.

  1. After July 1, 2013, a person may add or delete collateral covered by, continue or terminate the effectiveness of, or otherwise amend the information provided in a pre-effective-date financing statement only in accordance with the law of the jurisdiction governing perfection as provided in AS 45.29.101 45.29.709 , as those sections read on July 1, 2013. However, the effectiveness of a pre-effective-date financing statement may also be terminated in accordance with the law of the jurisdiction in which the financing statement is filed.
  2. Except as otherwise provided in (d) of this section, if the law of this state governs perfection of a security interest, the information in a pre-effective-date financing statement may be amended after July 1, 2013, only if
    1. the pre-effective-date financing statement and an amendment are filed in the office specified in AS 45.29.501 ;
    2. an amendment is filed in the office specified in AS 45.29.501 concurrently with, or after the filing in that office of, an initial financing statement that satisfies AS 45.29.806(c) ; or
    3. an initial financing statement that provides the information as amended and satisfies AS 45.29.806(c) is filed in the office specified in AS 45.29.501.
  3. If the law of this state governs perfection of a security interest, the effectiveness of a pre-effective-date financing statement may be continued only under AS 45.29.805(c) and (e) or 45.29.806 .
  4. Whether or not the law of this state governs perfection of a security interest, the effectiveness of a pre-effective-date financing statement filed in this state may be terminated on or after July 1, 2013, by filing a termination statement in the office in which the pre-effective-date financing statement is filed, unless an initial financing statement that satisfies AS 45.29.806(c) has been filed in the office specified by the law of the jurisdiction governing perfection as provided in AS 45.29.101 45.29.709 , as those sections read on July 1, 2013, as the office in which to file a financing statement.
  5. In this section, “pre-effective-date financing statement” means a financing statement filed before July 1, 2013.

History. (§ 31 ch 64 SLA 2013)

Revisor’s notes. —

Enacted as sec. 31, ch. 64, SLA 2013, and codified in 2013. Section 31, ch. 64, SLA 2013 reads: “Transition: Amendment of pre-effective-date financing statement. (a) After July 1, 2013, a person may add or delete collateral covered by, continue or terminate the effectiveness of, or otherwise amend the information provided in a pre-effective-date financing statement only in accordance with the law of the jurisdiction governing perfection as provided in AS 45.29, as amended by secs. 3 — 25 of this Act. However, the effectiveness of a pre-effective-date financing statement may also be terminated in accordance with the law of the jurisdiction in which the financing statement is filed.

“(b) Except as otherwise provided in (d) of this section, if the law of this state governs perfection of a security interest, the information in a pre-effective-date financing statement may be amended after July 1, 2013, only if

“(1) the pre-effective-date financing statement and an amendment are filed in the office specified in AS 45.29.501 ;

“(2) an amendment is filed in the office specified in AS 45.29.501 concurrently with, or after the filing in that office of, an initial financing statement that satisfies sec. 30(c) of this Act; or

“(3) an initial financing statement that provides the information as amended and satisfies sec. 30(c) of this Act is filed in the office specified in AS 45.29.501 .

“(c) If the law of this state governs perfection of a security interest, the effectiveness of a pre-effective-date financing statement may be continued only under secs. 29(c) and (e) or 30 of this Act.

“(d) Whether or not the law of this state governs perfection of a security interest, the effectiveness of a pre-effective-date financing statement filed in this state may be terminated on or after July 1, 2013, by filing a termination statement in the office in which the pre-effective-date financing statement is filed, unless an initial financing statement that satisfies sec. 30(c) of this Act has been filed in the office specified by the law of the jurisdiction governing perfection as provided in AS 45.29, as amended by secs. 3 — 25 of this Act, as the office in which to file a financing statement.

“(e) In this section, ‘pre-effective-date financing statement’ means a financing statement filed before July 1, 2013.”

Cross references. —

See also AS 45.29.707 .

Sec. 45.29.808. Person entitled to file initial financing statement or continuation statement.

A person may file an initial financing statement or a continuation statement under AS 45.29.802 45.29.809 if

  1. the secured party of record authorizes the filing; and
  2. the filing is necessary under AS 45.29.802 45.29.809
    1. to continue the effectiveness of a financing statement filed before July 1, 2013; or
    2. to perfect or continue the perfection of a security interest.

History. (§ 32 ch 64 SLA 2013)

Revisor’s notes. —

Enacted as sec. 32, ch. 64, SLA 2013, and codified in 2013. Section 32, ch. 64, SLA 2013 reads: “Transition: Person entitled to file initial financing statement or continuation statement. A person may file an initial financing statement or a continuation statement under secs. 26 — 33 of this Act if

“(1) the secured party of record authorizes the filing; and

“(2) the filing is necessary under secs. 26 — 33 of this Act

“(A) to continue the effectiveness of a financing statement filed before July 1, 2013; or

“(B) to perfect or continue the perfection of a security interest.”

Cross references. —

See also AS 45.29.708 .

Sec. 45.29.809. Priority.

AS 45.29.102(a)(8) , (13), (61), (85), and (88), 45.29.105 , 45.29.307(f) , 45.29.311(a) , 45.29.316(h) and (i), 45.29.317(b) and (d), 45.29.326 , 45.29.406(e) , 45.29.408(b) , 45.29.503(a) , (b), and (f) — (h), 45.29.507(c) , 45.29.515(f) , 45.29.516(b) , 45.29.518 , 45.29.607(b) , as those provisions read on July 1, 2013, and AS 45.29.802 45.29.808 , determine the priority of conflicting claims to collateral. However, if the relative priorities of the claims were established before July 1, 2013, this chapter as it existed before July 1, 2013, determines priority.

History. (§ 33 ch 64 SLA 2013)

Revisor’s notes. —

Enacted as sec. 33, ch. 64, SLA 2013, and codified in 2013. Section 33, ch. 64, SLA 2013 reads: “Transition: Priority. Sections 3 — 32 of this Act determine the priority of conflicting claims to collateral. However, if the relative priorities of the claims were established before July 1, 2013, AS 45.29, as it existed before being amended by secs. 3 — 25 of this Act, determines priority.”

Cross references. —

See also AS 45.29.709 .

Sec. 45.29.810. Instructions to department of natural resources.

  1. The Department of Natural Resources shall adopt, amend, or repeal regulations to implement AS 45.29.102(a)(8) , (13), (61), (85), and (88), 45.29.105 , 45.29.307(f) , 45.29.311(a) , 45.29.316(h) and (i), 45.29.317(b) and (d), 45.29.326 , 45.29.406(e) , 45.29.408(b) , 45.29.503(a) , (b), and (f) - (h), 45.29.507(c) , 45.29.515(f) , 45.29.516(b) , 45.29.518 , and 45.29.607(b) , as those sections read on July 1, 2013, and this section.  The regulations take effect under AS 44.62 (Administrative Procedure Act), but not before July 1, 2013.
  2. On and after July 1, 2013, the following forms that the Department of Natural Resources provides for filing under AS 45.29.101 45.29.709 , as those provisions read on July 1, 2013, must be identical to the forms that were adopted by the American Law Institute and the National Conference of Commissioners on Uniform State Laws and with AS 45.29.102(a)(8) , (13), (61), (85), and (88), 45.29.105 , 45.29.307(f) , 45.29.311(a) , 45.29.316(h) and (i), 45.29.317(b) and (d), 45.29.326 , 45.29.406(e) , 45.29.408(b) , 45.29.503(a) , (b), and (f) — (h), 45.29.507(c) , 45.29.515(f) , 45.29.516(b) , 45.29.518 , and 45.29.607(b) , as those provisions read on July 1, 2013:
    1. UCC Financing Statement;
    2. UCC Financing Statement Addendum;
    3. UCC Financing Statement Amendment; and
    4. UCC Financing Statement Amendment Addendum.

History. (§ 34 ch 64 SLA 2013)

Revisor’s notes. —

Enacted as sec. 34, ch. 64, SLA 2013, and codified in 2013. Section 34, ch. 64, SLA 2013 reads: “Instructions to department of natural resources. (a) The Department of Natural Resources shall adopt, amend, or repeal regulations to implement the changes made by secs. 3 — 25 of this Act and this section. The regulations take effect under AS 44.62 (Administrative Procedure Act), but not before July 1, 2013.

“(b) On and after July 1, 2013, the following forms that the Department of Natural Resources provides for filing under AS 45.29, as amended by secs. 3 — 25 of this Act, must be identical to the forms that were adopted by the American Law Institute and the National Conference of Commissioners on Uniform State Laws and with the amendments made by secs. 3 — 25 of this Act:

“(1) UCC Financing Statement;

“(2) UCC Financing Statement Addendum;

“(3) UCC Financing Statement Amendment; and

“(4) UCC Financing Statement Amendment Addendum.”

Sec. 45.29.811. Saving clause.

AS 45.29.102(a)(8) , (13), (61), (85), and (88), 45.29.105 , 45.29.307(f) , 45.29.311(a) , 45.29.316(h) and (i), 45.29.317(b) and (d), 45.29.326 , 45.29.406(e) , 45.29.408(b) , 45.29.503(a) , (b), and (f) — (h), 45.29.507(c) , 45.29.515(f) , 45.29.516(b) , 45.29.518 , and 45.29.607(b) , as those provisions read on July 1, 2013, and AS 45.29.802 45.29.810 do not affect an action, case, or proceeding commenced before July 1, 2013.

History. (§ 35 ch 64 SLA 2013)

Revisor’s notes. —

Enacted as sec. 35, ch. 64, SLA 2013, and codified in 2013. Section 35, ch. 64, SLA 2013 reads: “Saving clause. Sections 3 — 34 of this Act do not affect an action, case, or proceeding commenced before July 1, 2013.”

Cross references. —

See also AS 45.29.702 .

Chapter 30. Sales of Mobile Homes.

Cross references. —

For failure to comply with AS 45.30 as an unlawful trade practice, see AS 45.50.471(b) .

Sec. 45.30.010. Mobile home standards. [Repealed, § 5 ch 104 SLA 1980.]

Sec. 45.30.011. Mobile home warranties.

  1. After August 27, 1980, a new mobile home sold by a mobile home dealer to a buyer is subject to a mobile home warranty. A mobile home warranty shall be set out in a separate written document entitled “Mobile Home Warranty,” which shall be delivered to the buyer by the mobile home dealer at the time a contract of sale is signed. The warranty must contain the name, address, and telephone number of the mobile home manufacturer and the mobile home dealer and must include at least the following provisions:
    1. the mobile home is free from any substantial defects in materials and workmanship;
    2. the manufacturer or dealer, or both, shall take appropriate action at the site of the mobile home to correct substantial defects in materials or workmanship that become evident within one year of the date of delivery of the mobile home to the buyer if the buyer, or a transferee of the buyer, gives written notice of the defect by registered or certified mail addressed to the business address of the manufacturer or dealer on a date that is not more than one year and 10 days after date of delivery of the mobile home;
    3. the manufacturer and the dealer are jointly and severally liable to the buyer, or a transferee of the buyer, for the fulfillment of the terms of warranty, and the buyer may notify the manufacturer or the dealer, or both, in the event action is required to correct substantial defects in materials or workmanship;
    4. the warranty is applicable to the mobile home structure, its plumbing, heating, and electrical systems, and all appliances and equipment installed or included in the mobile home unit by the manufacturer or dealer; and
    5. notwithstanding separate warranties applicable to appliances contained within a mobile home unit issued by the manufacturers of the appliances, primary responsibility for appropriate corrective action under the warranty rests with the manufacturer and the dealer of the mobile home unit, and written notice of defects must be initially reported to them.
  2. The warranty provided under (a) of this section is in addition to, and not in derogation of, all other rights and remedies that a buyer may have under any other law or instrument.
  3. The manufacturer and the dealer may not require the buyer to waive the buyer’s rights under (a) of this section.  A waiver of rights required by a manufacturer or dealer is contrary to public policy and is unenforceable.
  4. A mobile home dealer shall display a notice of reasonable size stating the applicability of the warranty required by this section, and shall, upon request, provide a sample copy of the warranty.  The notice shall be posted in each area in which purchase orders and sales contracts for mobile homes are written.
  5. The manufacturer shall compensate a mobile home dealer who incurs expenses as a result of warranty obligations for which the manufacturer is legally responsible or for obligations that the manufacturer imposes upon the dealer. A provision of contract which is contrary to this subsection is void as against public policy.
  6. In this section, a defect is “substantial” if it materially affects the fitness of the mobile home for occupancy or use by the buyer or a transferee.

History. (§ 1 ch 104 SLA 1980; am §§ 32 — 34 ch 3 SLA 2017)

Effect of amendments. —

The 2017 amendment, effective July 1, 2017, in the third sentence in the introductory language in (a), twice substituted “must” for “shall”; in (a)(2), twice substituted “that” for “which” and made a stylistic change; in (b) and (e), substituted “that” for “which”.

Opinions of attorney general. —

The federal Magnuson-Moss Warranty Act, 15 U.S.C. § 2301 et seq., preempts the following five elements of the state’s Mobile Home Warranty Act: (1) the requirement of a separate document found in subsection (a) of this section; (2) the requirement that the warranty be entitled “Mobile Home Warranty” also found in subsection (a) of this section; (3) the second requirement of paragraph (a)(3) of this section, that the warranty disclose to the buyer that the manufacturer and the dealer are jointly and severally liable to the buyer for the fulfillment of the terms of the warranty; (4) the requirement of disclosure, found in paragraph (a)(5), that the substantive obligation of primary responsibility for appropriate corrective action concerning appliances under the warranty rests with the manufacturer and the dealer; the mobile home warranty document must still disclose that it covers appliances installed or included in the mobile home; (5) the requirement that mobile home dealers display a notice of reasonable size stating the applicability of the warranty required by this section and to provide a sample copy of the warranty, and the requirement that this notice be posted in each area where purchase orders and sales contracts are made found in subsection (d) of this section. June 12, 1985, Op. Att’y Gen. (661-85-0607).

Sec. 45.30.015. Bonds.

  1. A manufacturer constructing mobile homes for sale in the state shall deposit a performance bond in the amount of $100,000 with the department to assure compliance with the provisions of AS 45.30.011 .
  2. A manufacturer who discontinues construction of mobile homes for sale in the state shall maintain a performance bond in the required amount for a period of 24 months after the date the last mobile home was delivered to a buyer in the state.

History. (§ 1 ch 104 SLA 1980; am § 1 ch 15 SLA 1986)

Opinions of attorney general. —

Mobile home dealers are not prohibited from selling mobile homes which are not covered by a manufacturer’s bond; however, the absence of a bond is a material fact which must be disclosed to the mobile home purchaser. August 8, 1986, Op. Att’y Gen. (661-86-0469).

Sec. 45.30.018. Private cause of action against bond.

  1. A buyer who has a claim against the manufacturer of the buyer’s mobile home for failure to fulfill the manufacturer’s obligations under AS 45.30.011 may file an action upon the bond required by AS 45.30.015 .
  2. Two copies of the complaint and the summons shall be served by certified mail on the attorney general at the time the action is filed.  Service upon the attorney general constitutes service on the surety. The attorney general shall transmit one copy of the complaint and summons to the surety within three business days after receiving the summons and complaint. The attorney general shall maintain a record, available for public inspection, of all actions commenced under this section.
  3. The remedy provided in this section is in addition to, and not in derogation of, all other rights and remedies that a buyer may have under another law or instrument.

History. (§ 2 ch 15 SLA 1986)

Opinions of attorney general. —

Mobile home dealers are not prohibited from selling mobile homes which are not covered by a manufacturer’s bond; however, the absence of a bond is a material fact which must be disclosed to the mobile home purchaser. August 8, 1986, Op. Att’y Gen. (661-86-0469).

Sec. 45.30.020. Duties of department. [Repealed, § 5 ch 123 SLA 1972.]

Sec. 45.30.025. Surety’s liability and right to cancel bond.

  1. The surety shall inform the attorney general in writing of all claims against the bond lodged directly with the surety and all sums paid against the bond.
  2. The surety on the bond is not liable in an aggregate amount in excess of that named in the bond.
  3. Nothing in this chapter impairs the right of a surety to cancel its bond for lawful reasons; however, a cancellation does not extinguish the surety’s liability on the bond for mobile homes previously delivered to buyers in the state.

History. (§ 3 ch 15 SLA 1986)

Revisor’s notes. —

Enacted as AS 45.30.045. Renumbered in 1986.

Opinions of attorney general. —

Mobile home dealers are not prohibited from selling mobile homes which are not covered by a manufacturer’s bond; however, the absence of a bond is a material fact which must be disclosed to the mobile home purchaser. August 8, 1986, Op. Att’y Gen. (661-86-0469).

Sec. 45.30.030. Administration. [Repealed, § 5 ch 104 SLA 1980.]

Sec. 45.30.040. Enforcement of compliance.

  1. A department inspector shall give written notice to the owner, dealer, or manufacturer of a mobile home of each violation of AS 45.30.011 .  The notice of violation shall accurately describe the violation and give specific reference to the section and paragraph of the statutes.
  2. [Repealed by § 5 ch 104 SLA 1980.]
  3. Whenever it determines that there may be a violation of the provisions of this chapter by a manufacturer or dealer of mobile homes, the department may give notice of hearing, and, within 30 days after giving notice, a hearing shall be held by the office of administrative hearings (AS 44.64.010 ) to determine whether there has been a violation. After notice and hearing,
    1. if the department finds that there has been a violation of the provisions of this chapter, the department may issue an order directing that the person who is violating the provision cure the violation in a reasonable time and in a reasonable manner;
    2. if the department determines that violations of the provisions of this chapter are regular and recurring, it may require forfeiture of the bond to the benefit of the state and arrange for distribution of the proceeds of the bond to the mobile home owners injured by the activities of the dealer or manufacturer, or to mobile home dealers injured by the activities of the manufacturer.
  4. The provisions of AS 44.62.330 44.62.630 apply to a hearing held under (c) of this section.

History. (§ 2 ch 80 SLA 1971; am § 3 ch 123 SLA 1972; am § 5 ch 114 SLA 1974; am §§ 2, 3, 5 ch 104 SLA 1980; am § 84 ch 163 SLA 2004)

Sec. 45.30.050. Penalty. [Repealed, § 5 ch 104 SLA 1980.]

Sec. 45.30.060. Definitions. [Repealed, § 5 ch 123 SLA 1972.]

Sec. 45.30.070. Agreements to locate prohibited.

A vendor of mobile homes may not require as a condition of sale that a purchaser locate the mobile home in a particular mobile home park or in one of a particular group of mobile home parks.

History. (§ 6 ch 138 SLA 1976)

Sec. 45.30.100. Definitions.

In this chapter,

  1. “buyer” means a person who purchases a mobile home for personal use and not for purposes of resale;
  2. “department” means the Department of Law;
  3. “mobile home” means a vehicle designed and equipped for human habitation, and which may be drawn by a motor vehicle only when authorized by permit.

History. (§ 4 ch 104 SLA 1980; am § 4 ch 15 SLA 1986)

Revisor’s notes. —

Enacted as AS 45.30.061. Renumbered in 1980.

Chapter 35. Lease-Purchases of Personal Property.

Cross references. —

For failure to comply with AS 45.35 as an unlawful trade practice, see AS 45.50.471(b) .

Sec. 45.35.010. Disclosure of information.

  1. A lessor shall disclose clearly and conspicuously in writing in a lease-purchase agreement each of the following items that applies to the lease-purchase agreement or to the personal property leased under the agreement:
    1. the total number of payments, the total monetary amount of all payments, and the timing of all payments that are to be made before the consumer acquires ownership of the personal property;
    2. a statement that the consumer will not own the personal property until the consumer makes all of the payments necessary to acquire ownership;
    3. a statement that the consumer must pay the lessor the fair market value of the personal property if, and as of the date, the personal property is lost, stolen, damaged, or destroyed;
    4. a brief description, including an identification number if available, of the personal property that is sufficient to identify the property to the consumer and the lessor;
    5. a statement whether the personal property is new or used;
    6. a brief description of any existing damage to the leased personal property;
    7. the cash price of the property, except that, if the agreement involves a lease of more than one item as a set, the aggregate cash price of all items is sufficient;
    8. the total initial payment made or required when or before an individual becomes liable on the agreement or when the personal property is delivered, whichever event is later;
    9. a statement that the total monetary amount of the lease payment does not include other charges under the agreement, including late fees, processing fees, default charges, pick-up charges, and reinstatement fees, and a list of these other charges;
    10. a statement clearly summarizing the terms of the consumer’s option to purchase the personal property, including a statement that the consumer has the right to exercise an early purchase option, and the price, formula, or method to be used to determine the price at which the property may be purchased;
    11. a statement describing the lessor’s responsibilities under AS 45.35.020 ;
    12. the date that the lease-purchase agreement is entered into;
    13. the names, street addresses, and mailing addresses of the lessor and consumer;
    14. a statement that the consumer may terminate the agreement without penalty by voluntarily surrendering or returning the personal property in good repair, ordinary wear and tear excepted, when the agreement expires and by paying any payment past due under the agreement; and
    15. notice of the right of the consumer to reinstate the agreement under AS 45.35.050 .
  2. The disclosures under (a) of this section must appear on the face of the document containing the lease-purchase agreement and above the line for the consumer’s signature. The lessor shall provide the consumer with a copy of the lease-purchase agreement after the consumer signs the agreement.
  3. If a disclosure under (a) of this section becomes inaccurate as the result of an act, occurrence, or agreement by the consumer after receiving a copy of the lease-purchase agreement, the resulting inaccuracy is not a violation of this chapter.
  4. If a lessor complies with the disclosure requirements under 15 U.S.C. 1601 — 1693r (Consumer Credit Protection Act) that are applicable to a lease-purchase agreement, the lessor’s compliance satisfies the disclosure requirements of this section.

History. (§ 2 ch 10 SLA 1999)

Editor’s notes. —

Section 4, ch. 10, SLA 1999 provides that ch. 10, SLA 1999, which enacted this section, “does not apply to a lease-purchase agreement unless the lease-purchase agreement is entered into on or after August 4, 1999.” For purposes of this statement of applicability, § 4 also provides that “lease-purchase agreement” has the meaning given in AS 45.35.099 .

Sec. 45.35.020. Maintenance and warranties.

  1. A lessor is responsible for making all normal repairs that may be required for the personal property during the lease-purchase agreement, but the lessor is not responsible for any unauthorized repairs or damage caused by improper use.
  2. If a manufacturer’s warranty covers the personal property when the consumer acquires ownership of the property and if a transfer of the warranty is allowed under the terms of the warranty, the lessor shall transfer warranty to the consumer.

History. (§ 2 ch 10 SLA 1999)

Editor’s notes. —

Section 4, ch. 10, SLA 1999 provides that ch. 10, SLA 1999, which enacted this section, “does not apply to a lease-purchase agreement unless the lease-purchase agreement is entered into on or after August 4, 1999.” For purposes of this statement of applicability, § 4 also provides that “lease-purchase agreement” has the meaning given in AS 45.35.099 .

Sec. 45.35.030. Late fees.

  1. A lessor may not charge a consumer more than $5 for each payment that is late under a lease-purchase agreement.
  2. When calculating time for the purpose of determining whether a lease payment is late and subject to a late fee under a lease-purchase agreement, a lessor may not include any period of time when the personal property has been repossessed by the lessor or voluntarily surrendered by the consumer.

History. (§ 2 ch 10 SLA 1999)

Editor’s notes. —

Section 4, ch. 10, SLA 1999 provides that ch. 10, SLA 1999, which enacted this section, “does not apply to a lease-purchase agreement unless the lease-purchase agreement is entered into on or after August 4, 1999.” For purposes of this statement of applicability, § 4 also provides that “lease-purchase agreement” has the meaning given in AS 45.35.099 .

Sec. 45.35.040. Prohibited provisions.

A lease-purchase agreement may not contain

  1. a confession of judgment;
  2. a negotiable instrument;
  3. a security interest in, or another claim on, real or personal property that is not the subject of the agreement;
  4. a wage assignment;
  5. an assignment of an Alaska permanent fund dividend;
  6. a waiver by the consumer of claims or defenses relating to the agreement;
  7. a provision authorizing the lessor or a person acting on the lessor’s behalf to enter the consumer’s premises or to commit a breach of the peace in the repossession of personal property;
  8. an agreement by the consumer to pay attorney fees and costs, except as allowed under court rules.

History. (§ 2 ch 10 SLA 1999)

Editor’s notes. —

Section 4, ch. 10, SLA 1999 provides that ch. 10, SLA 1999, which enacted this section, “does not apply to a lease-purchase agreement unless the lease-purchase agreement is entered into on or after August 4, 1999.” For purposes of this statement of applicability, § 4 also provides that “lease-purchase agreement” has the meaning given in AS 45.35.099 .

Sec. 45.35.050. Reinstatement of contract by consumer; repossession.

  1. If a consumer fails to make a payment under a lease-purchase agreement by the time required for the payment and the lessor terminates the agreement due to the consumer’s failure to make the payment, the consumer may reinstate the agreement by paying the items identified under (b) of this section before the end of the grace period.
  2. The following are the items that must be paid by the consumer in order to reinstate a lease-purchase agreement under (a) of this section:
    1. all scheduled payments that are past due under the agreement;
    2. the next scheduled payment;
    3. the reasonable costs of picking up and redelivering the property if the lessor has picked up the property from the consumer; and
    4. any applicable late fee.
  3. A consumer who reinstates a lease-purchase agreement under (a) of this section does not lose any rights or options the consumer had under the agreement before the failure to make the payment when due.
  4. Notwithstanding (a) of this section, if a consumer has made less than two-thirds of the total amount of payments necessary to acquire ownership of the personal property that is the subject of a lease-purchase agreement and if the consumer has returned or voluntarily surrendered the personal property to the lessor before the end of the grace period other than as a result of a court action, the consumer has 21 days after returning the property to the lessor to reinstate the lease-purchase agreement.
  5. Notwithstanding (a) of this section, if a consumer has made two-thirds or more of the total amount of payments necessary to acquire ownership of the personal property that is the subject of a lease-purchase agreement and if the consumer has returned or voluntarily surrendered the personal property to the lessor before the end of the grace period other than as a result of a court action, the consumer has 45 days after returning the personal property to the lessor to reinstate the lease-purchase agreement.
  6. This section does not prohibit a lessor from attempting to repossess personal property during the period when the consumer may reinstate the lease-purchase agreement under this section, and repossession does not affect the consumer’s right to reinstate the agreement. If the lessor repossesses the personal property, upon reinstatement of the agreement by the consumer under this section, the lessor shall provide the consumer with the same personal property that was repossessed or with personal property of comparable quality and condition.
  7. In this section,
    1. “grace period” means
      1. two days after the agreement’s renewal date if, under the agreement, the payments are to be made more often than monthly; or
      2. five days after the agreement’s renewal date if, under the agreement, the payments are to be made monthly or less frequently;
    2. “renewal date” means the date when a payment is to be made that would automatically renew the agreement.

History. (§ 2 ch 10 SLA 1999)

Editor’s notes. —

Section 4, ch. 10, SLA 1999 provides that ch. 10, SLA 1999, which enacted this section, “does not apply to a lease-purchase agreement unless the lease-purchase agreement is entered into on or after August 4, 1999.” For purposes of this statement of applicability, § 4 also provides that “lease-purchase agreement” has the meaning given in AS 45.35.099 .

Sec. 45.35.060. Application of disclosure requirements upon occurrence of subsequent events.

  1. When a lessor and a consumer replace an existing lease-purchase agreement between the lessor and consumer with a new lease-purchase agreement, the lessor shall make the disclosures required by AS 45.35.010 for the new lease-purchase agreement. In this subsection, “new lease-purchase agreement” does not include
    1. the addition of personal property to or the return or substitution of personal property already covered by a lease-purchase agreement that covers more than one item of personal property if the average lease payment allocable to a payment period is not changed by more than 25 percent of the average lease payment before the change;
    2. a deferral or extension of a lease payment or portion of a payment;
    3. a reduction in the amount of the payments or other charges in the lease-purchase agreement; or
    4. a lease-purchase agreement that is the subject of a court action.
  2. The lessor is not required to make the disclosures under AS 45.35.010 when the lessor and the consumer extend the length of a lease-purchase agreement.

History. (§ 2 ch 10 SLA 1999)

Editor’s notes. —

Section 4, ch. 10, SLA 1999 provides that ch. 10, SLA 1999, which enacted this section, “does not apply to a lease-purchase agreement unless the lease-purchase agreement is entered into on or after August 4, 1999.” For purposes of this statement of applicability, § 4 also provides that “lease-purchase agreement” has the meaning given in AS 45.35.099 .

Sec. 45.35.070. Advertisement.

  1. If an advertisement for a lease-purchase agreement refers to or states the dollar amount of a payment and the right to acquire ownership of a specific item of personal property, the advertisement must also clearly and conspicuously state each of the following items that is applicable:
    1. that the advertised transaction is a lease-purchase agreement;
    2. the total amount to be paid to acquire ownership of the item; and
    3. that the consumer will not acquire ownership rights in the item until the consumer pays the total amount to be paid to acquire ownership of the item.
  2. The owner and the employees of a communications medium in which an advertisement covered by (a) of this section appears or through which the advertisement is disseminated is not liable for a failure of a lessor to comply with (a) of this section.
  3. The requirements of (a) of this section do not apply to an advertisement that is published in the yellow pages of a telephone directory or another similar business directory.

History. (§ 2 ch 10 SLA 1999)

Editor’s notes. —

Section 4, ch. 10, SLA 1999 provides that ch. 10, SLA 1999, which enacted this section, “does not apply to a lease-purchase agreement unless the lease-purchase agreement is entered into on or after August 4, 1999.” For purposes of this statement of applicability, § 4 also provides that “lease-purchase agreement” has the meaning given in AS 45.35.099 .

Sec. 45.35.080. Written receipts.

On request, a lessor shall provide the consumer with a written receipt for each payment made by cash or money order.

History. (§ 2 ch 10 SLA 1999)

Editor’s notes. —

Section 4, ch. 10, SLA 1999 provides that ch. 10, SLA 1999, which enacted this section, “does not apply to a lease-purchase agreement unless the lease-purchase agreement is entered into on or after August 4, 1999.” For purposes of this statement of applicability, § 4 also provides that “lease-purchase agreement” has the meaning given in AS 45.35.099 .

Sec. 45.35.090. Coordination with other laws.

  1. If there is a conflict between this chapter and AS 45.12 (Uniform Commercial Code-Leases), this chapter governs.
  2. If there is a conflict between this chapter and 15 U.S.C. 1601 — 1693r (Consumer Credit Protection Act), 15 U.S.C. 1601 — 1693r govern.

History. (§ 2 ch 10 SLA 1999)

Editor’s notes. —

Section 4, ch. 10, SLA 1999 provides that ch. 10, SLA 1999, which enacted this section, “does not apply to a lease-purchase agreement unless the lease-purchase agreement is entered into on or after August 4, 1999.” For purposes of this statement of applicability, § 4 also provides that “lease-purchase agreement” has the meaning given in AS 45.35.099 .

Sec. 45.35.099. Definitions.

In this chapter,

  1. “advertisement” means a commercial message in a communications medium that directly or indirectly promotes entering into a lease-purchase agreement or provides information about a lease-purchase agreement, but does not include a price tag, window sign, or other merchandising aid used on the physical premises of a store;
  2. “cash price” means the price, calculated as of the date a lease-purchase agreement is entered into, at which the lessor would sell to a person the personal property that is the subject of the lease-purchase agreement;
  3. “consumer” means an individual who leases personal property under a lease-purchase agreement;
  4. “lease-purchase agreement”
    1. means an agreement for the use of personal property primarily for personal, family, or household purposes if the agreement is for an initial period of four months or less, is automatically renewable with each payment after the initial period, does not obligate or require the consumer to continue leasing or using the property beyond the initial period, and permits the consumer to become the owner of the property;
    2. does not include
      1. an agreement primarily for commercial or agricultural purposes;
      2. a lease or bailment of personal property if the lease or bailment is incidental to the lease of real property and provides that the consumer does not have an option to purchase the leased personal property;
      3. a lease of a motor vehicle;
      4. a security interest as defined under AS 45.01.211 ;
      5. a retail installment transaction under AS 45.10;
      6. a lease under AS 45.12;
  5. “lessor” means a person who, in the ordinary course of business, regularly provides to consumers the use of property through lease-purchase agreements and to whom payments are initially payable on the face of the lease-purchase agreement.

History. (§ 2 ch 10 SLA 1999; am § 111 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 (4)(B)(iv), substituted “AS 45.01.211 ” for “AS 45.01.201 ”.

Editor’s notes. —

Section 4, ch. 10, SLA 1999 provides that ch. 10, SLA 1999, which enacted this section, “does not apply to a lease-purchase agreement unless the lease-purchase agreement is entered into on or after August 4, 1999.” For purposes of this statement of applicability, § 4 also provides that “lease-purchase agreement” has the meaning given in AS 45.35.099 .

Chapter 45. Trade Practices.

Article 1. Interest.

Sec. 45.45.010. Legal rate of interest; prepayment of interest.

  1. The rate of interest in the state is 10.5 percent a year and no more on money after it is due except as provided in (b) of this section.
  2. Interest may not be charged by express agreement of the parties in a contract or loan commitment that is more than the greater of 10 percent or five percentage points above the annual rate charged member banks for advances by the 12th Federal Reserve District on the day on which the contract or loan commitment is made. A contract or loan commitment in which the principal amount exceeds $25,000 is exempt from the limitation of this subsection.
  3. [Repealed, § 3 ch 84 SLA 1973.]
  4. [Repealed, § 2 ch 94 SLA 1981.]
  5. [Repealed, § 4 ch 146 SLA 1974.]
  6. A bank, credit union, savings and loan institution, pension fund, insurance company, or mortgage company may not require or accept any percent of ownership or profits above its interest rate. This subsection does not apply to a loan if the principal amount of the loan is $1,000,000 or more and the term of the loan is five years or more, or to a negatively amortizing loan secured by owner-occupied real property originated under a program approved or sponsored by
    1. the federal government, including congressionally chartered national corporations; or
    2. the state if
      1. the real property that secures the loan is not subject to forced sale provided the owner has not violated the terms of the loan agreement including terms regarding
        1. payment of property taxes;
        2. payment of hazard or fire insurance premiums;
        3. keeping the property in reasonable repair;
        4. not vacating the property for a period longer than 12 months;
      2. the owner may not be evicted from the real property that secures the loan unless a term of the loan agreement regarding a matter listed in (A)(i) — (iv) of this paragraph has been violated;
      3. neither the estate nor any heir of the former owner may be compelled to pay a deficiency judgment related to the loan; and
      4. the estate or an heir of the former owner has a right of first refusal and may either pay off the loan balance in full, if the former owner had equity in the property, or pay a sum not to exceed 95 percent of the value of the property at the time of exercise of the right of first refusal as determined by an independent real estate appraiser licensed under AS 08.87.
  7. Loan contracts and commitments covering one- to four-family dwellings may be prepaid without penalty, except federally insured loans that require a prepayment penalty.
  8. If the limitations on interest rates provided for in this section are inconsistent with the provisions of any other statute covering maximum interest, service charges, or discount rates, then the provisions of the other statute prevail.

History. (§ 25-1-1 ACLA 1949; am § 20 ch 143 SLA 1968; am § 2 ch 69 SLA 1969; am §§ 1, 2 ch 94 SLA 1969; am §§ 1, 2 ch 239 SLA 1970; am §§ 1 — 3 ch 84 SLA 1973; am §§ 1 — 4 ch 146 SLA 1974; am § 1 ch 110 SLA 1976; am § 1 ch 159 SLA 1976; am § 2 ch 107 SLA 1980; am §§ 1, 2 ch 94 SLA 1981; am § 1 ch 56 SLA 1982; am § 1 ch 51 SLA 1998; am § 1 ch 29 SLA 2011)

Cross references. —

For maximum rates of interest applicable to: bank credit cards, see AS 06.05.209 ; credit unions, see AS 06.45.060 ; judgments, see AS 09.30.070 ; life insurance policy loans, see AS 21.45.080 ; premium finance agreements, see AS 06.40.120 ; retail installment contracts, see AS 45.10.120 ; small loan companies, see AS 06.20.230 .

For provision prescribing the applicability of the 2011 amendment of (b) of this section, see § 2, ch. 29, SLA 2011, in the 2011 Temporary and Special Acts.

Effect of amendments. —

The 2011 amendment, effective October 20, 2011, inserted “the greater of 10 percent or” in the first sentence in (b).

Legislative history reports. —

For report on ch. 84, SLA 1973 (FCCS HCSSB 37), see 1973 Senate Journal Supplement 16, pp. 1 and 2, following p. 766 of the 1973 Senate Journal.

Opinions of attorney general. —

It is unlawful for a bank to charge or collect “points” which, when in combination with the interest charged for a loan, would exceed usury ceiling established by subsection (b). 1979 Alas. Op. Att'y Gen. No. 6.

Notes to Decisions

Analysis

I.General Consideration

This section is not a law prescribing interest on anything. State v. American Can Co., 362 P.2d 291 (Alaska 1961), overruled in part, Alascom, Inc. v. North Slope Borough, 659 P.2d 1175 (Alaska 1983).

It simply fixes a maximum limit on the rate that may be charged in certain instances. State v. American Can Co., 362 P.2d 291 (Alaska 1961), overruled in part, Alascom, Inc. v. North Slope Borough, 659 P.2d 1175 (Alaska 1983).

Applicability. —

Simplest interpretation of AS 45.45.010 is that subsection (b) governs all contract or loan commitments with express interest rates. Cox v. Estate of Cooper, 426 P.3d 1032 (Alaska 2018).

Loan over $25,000. —

In a case concerning the interpretation of Alaska's usury statute, AS 45.45.010 , the Supreme Court concluded the 20% annual interest rate was not usurious because the loan was for over $25,000. Cox v. Estate of Cooper, 426 P.3d 1032 (Alaska 2018).

This section cannot be construed as authorizing compound interest. In re Estate Gregory, 487 P.2d 59 (Alaska 1971).

Fees and charges for expenses incurred by a savings and loan association in making a loan are not considered “interest” within the meaning of the usury law. Fikes v. First Fed. Sav. & Loan Ass'n, 533 P.2d 251 (Alaska 1975).

Loan fee similar to interest or unreasonably large. —

If a loan fee is either substantially similar to interest in all material respects or unreasonably large, the loan fee, or a portion thereof, could well be treated as an interest charge in computing the effective interest rate for purposes of this section. Fikes v. First Fed. Sav. & Loan Ass'n, 533 P.2d 251 (Alaska 1975).

Factual questions germane to determining whether loan fee to be treated as interest charge. —

Where bank charged a one and one-half percent loan fee in addition to interest, which was in addition to fees for specific services, factual questions to be considered on remand include: what charges, if any, the loan fee was designed to defray; whether the amount of the loan fee was dependent on the amount of the loan or the risk of the enterprise being financed; whether the loan fee and interest rate were charged on the entire amount regardless of the size and period of outstanding balances; and how the bank treated, for internal accounting, the loan fee and the interest. Fikes v. First Fed. Sav. & Loan Ass'n, 533 P.2d 251 (Alaska 1975).

“Due”. —

Since former AS 09.50.280 and former subsection (a)(1) (see now subsection (a), as amended) of this section delimit in the same words time periods during which interest runs, they are in pari materia, so “due” should receive the same construction in both statutes. State v. Phillips, 470 P.2d 266 (Alaska 1970).

Whenever any cause of action accrues, the amount later adjudicated as damages is immediately “due” in the sense of AS 09.50.280 and subsection (a) of this section. National Bank v. J. B. L. & K. of Alaska, Inc., 546 P.2d 579 (Alaska 1976).

Money becomes “due” within the meaning of subsection (a) of this section when the cause of action accrues. Guin v. Ha, 591 P.2d 1281 (Alaska 1979).

Whenever any cause of action accrues, the amount later adjudicated as damages is immediately “due” in the sense of AS 09.50.280 and subsection (a) of this section. All damages then, whether liquidated or unliquidated, pecuniary or nonpecuniary, should carry interest from the time the cause of action accrues unless, for some reason peculiar to an individual case, such an award of interest would do an injustice. This construction is in accord with the legislative intent manifested in its 1965 amendment to AS 09.50.280 . State v. Phillips, 470 P.2d 266 (Alaska 1970).

When insurer’s obligation to pay post-judgment interest “due”. —

Since until a valid judgment is rendered against the insured or a settlement agreement is entered into, the insured is not liable to pay damages to the injured party, the sum that the insurance company may eventually pay on behalf of the insured, including post-judgment interest, is not “due” at the time of the injury, but rather at the time of settlement or judgment. Guin v. Ha, 591 P.2d 1281 (Alaska 1979).

Although an agreement between the insurer and the insured does not obligate the insurer to pay interest accruing after entry of judgment, an obligation to pay post-judgment interest would arise on behalf of the insurer when judgment is rendered against the insured or a settlement agreement is finalized, since upon the occurrence of either event the insurer would become obligated to make payment under its liability agreement, and the insurer’s obligation would therefore become “due” within the meaning of subsection (a) of this section. Thus, the insurer would be responsible for interest accruing after the date of entry of judgment or settlement. Guin v. Ha, 591 P.2d 1281 (Alaska 1979).

1976 amendment not retroactive. —

The amendment raising the interest rate on money “due” to eight percent (now 10.5 percent) is not to be applied retroactively. City of Juneau v. Commer. Union Ins. Co., 598 P.2d 957 (Alaska 1979).

For the period prior to the effective date of the 1976 amendment to this section, a claimant is entitled to recover interest on the judgment at the rate of only six percent per annum and a court’s award of interest at eight percent for that period is excessive. Drickersen v. Drickersen, 604 P.2d 1082 (Alaska 1979).

Application of variable interest rate formula. —

Provision in note for “interest after maturity at the highest lawful contract rate” is sufficient to constitute an express interest agreement setting interest at highest rate sanctioned by application of variable interest rate formula. Riley v. Northern Commer. Co., 648 P.2d 961 (Alaska 1982).

Where promissory note provided for “interest after maturity at the highest lawful contract rate,” award of postjudgment interest at highest rate allowable on date of maturity, pursuant to interest rate formula in this section, was proper. Riley v. Northern Commer. Co., 648 P.2d 961 (Alaska 1982).

Rate set forth in subsection (a) is not the highest legal rate formula of interest; only by application of the variable interest rate is it possible to ascertain the highest legal rate of interest. Riley v. Northern Commer. Co., 648 P.2d 961 (Alaska 1982).

Note provision calling for “highest lawful rate at maturity” indicates intent to be bound by modifications to statutory formula enacted prior to maturity. Riley v. Northern Commer. Co., 648 P.2d 961 (Alaska 1982).

Where interest provision is intended to establish compensatory damages for detention of money, language in subsection (b) that amended formula applies only to contracts executed after June 4, 1976, and does not preclude parties to contract from agreeing to be bound by future modifications in the statutory formula. Riley v. Northern Commer. Co., 648 P.2d 961 (Alaska 1982).

Interest on funds deposited in interpleader actions. —

As a general rule, interest on funds deposited with the court in interpleader actions is not recoverable from the unsuccessful claimant because the funds were not in his or her possession, available for investment; but when an unsuccessful claimant had no legitimate claim to the funds, the court may award interest against the claimant since by filing his suit, the claimant had caused the funds to be interpleaded and thereby deprived the other party of their use. Bevins v. Peoples Bank & Trust Co., 671 P.2d 875 (Alaska 1983).

Interest on refunds. —

Regulatory Commission of Alaska properly followed the Pipeline Act by ordering interest on refunds pipeline owners owed, at the legal rate set forth in this section, rather than the floating rate set forth in AS 09.30.070(b) ; AS 09.30.070(b) is specifically tailored to tort and contract claims. Amerada Hess Pipeline Corp. v. Regulatory Comm'n of Alaska, 176 P.3d 667 (Alaska 2008).

Applied in

Soby v. Johnson, 270 F.2d 193 (9th Cir. Alaska 1959); Sam Macri & Sons, Inc. v. U. S. A., 313 F.2d 119 (9th Cir. Alaska 1963); Moran v. Kenai Towing & Salvage, 523 P.2d 1237 (Alaska 1974); Western Airlines v. Lathrop Co., 535 P.2d 1209 (Alaska 1975); A & G Constr. Co. v. Reid Bros. Logging Co., 547 P.2d 1207 (Alaska 1976); Alaska Far E. Corp. v. Newby, 630 P.2d 533 (Alaska 1981); Land & Marine Rental Co. v. Rawls, 686 P.2d 1187 (Alaska 1984); Boyles v. Smith, 759 P.2d 518 (Alaska 1988); Home Indem. Co. v. Lane Powell Moss & Miller, 43 F.3d 1322 (9th Cir. Alaska 1995).

Quoted in

Slaymaker v. Peterkin, 518 P.2d 763 (Alaska 1974); Berger v. State, 910 P.2d 581 (Alaska 1996).

Stated in

Triangle, Inc. v. State, 632 P.2d 965 (Alaska 1981).

Cited in

State v. Alaska Continental Dev. Corp., 630 P.2d 977 (Alaska 1980); Mullen v. Christiansen, 642 P.2d 1345 (Alaska 1982); 907 P.2d 1363; State v. Carlson, 65 P.3d 851 (Alaska 2003); Kodiak Island Borough v. Mahoney, 71 P.3d 896 (Alaska 2003).

II.Prejudgment Interest

Prejudgment interest. —

The legislature’s 1965 amendment to AS 09.50.280 evinces an intent that prejudgment interest be awarded more liberally than prior judicial interpretations of this section would have called for. State v. Phillips, 470 P.2d 266 (Alaska 1970); National Bank v. J. B. L. & K. of Alaska, Inc., 546 P.2d 579 (Alaska 1976).

Failure to award prejudgment interest creates a substantial financial incentive for defendants to litigate even where liability is so clear and the jury award so predictable that they should settle. State v. Phillips, 470 P.2d 266 (Alaska 1970).

Subsection (a) of this section imposes on defendants in tort actions the obligation to pay prejudgment interest computed from the date of injury. Guin v. Ha, 591 P.2d 1281 (Alaska 1979).

Prejudgment interest is substantive right. —

Prejudgment interest is not a “remedial” or “procedural” device, but it is a substantive right of an injured party, to allow that party to recover for economic loss occasioned by his inability to use the award of damages between the injury and judgment. City of Juneau v. Commer. Union Ins. Co., 598 P.2d 957 (Alaska 1979).

The purpose of prejudgment interest is to place an injured plaintiff in the same position as if he had been compensated immediately for his loss. City of Juneau v. Commer. Union Ins. Co., 598 P.2d 957 (Alaska 1979); National Bank v. J. B. L. & K. of Alaska, Inc., 546 P.2d 579 (Alaska 1976); Guin v. Ha, 591 P.2d 1281 (Alaska 1979).

The purpose of awarding prejudgment interest is not to penalize the losing party, but rather to compensate the successful claimant for losing the use of the money between the date he or she was entitled to it and the date of judgment; a corollary purpose is to prevent the judgment debtor from being unjustly enriched by the use of that money. Bevins v. Peoples Bank & Trust Co., 671 P.2d 875 (Alaska 1983).

And is subject to insurance contract liability limitations. —

Classified as an item of compensatory damage, prejudgment interest falls within the liability damage clause in an insurance contract and is subject to the amount limitation contained therein. Thus, when an insurer pays on behalf of its insured the limits of liability coverage to an injured third party, it discharges its obligation under the insurance policy. Guin v. Ha, 591 P.2d 1281 (Alaska 1979).

Thus insurer is not liable for prejudgment interest exceeding policy limits. —

An insurer is not liable for prejudgment interest which, when added to liability damages, exceeds the limitation on liability under the applicable insurance contract. Guin v. Ha, 591 P.2d 1281 (Alaska 1979).

Public policy does not require insurers to assume liability for prejudgment interest exceeding policy limits regardless of the terms of the insurance contract. Guin v. Ha, 591 P.2d 1281 (Alaska 1979).

Although it will be liable for such interest not exceeding limits. —

While the insurer will not be liable for prejudgment interest in excess of the applicable damage limitation, the insurer will be liable for any prejudgment interest which, when added to damages rendered against the insured, does not exceed the limitation on liability. Thus, the insurer may be obligated to pay prejudgment interest assessed against its insured despite the absence of a clause specifically addressed to prejudgment interest in the insurance contract. Guin v. Ha, 591 P.2d 1281 (Alaska 1979).

Allowance of interest prior to date of judgment held error. —

Where there was no due date fixed for the repayment of several loans the plaintiff claimed he made to the defendant, and it was not even determined until the trial of the case that the defendant and not someone else was liable to the plaintiff for the moneys he advanced, it was error to allow interest on the loan claim for any time previous to the date of the judgment. Chirikoff Island Cattle Corp. v. Robinette, 372 P.2d 791 (Alaska 1962).

Prejudgment interest in divorce proceedings. —

Given the highly discretionary nature of property division cases, a trial court may award prejudgment interest in divorce proceedings; it is not required, however, and interest should not be awarded where it “would do an injustice.” Morris v. Morris, 724 P.2d 527 (Alaska 1986).

III.Usurious Transactions

A third-party loan cloaked in the form of a lease is within the purview of the usury laws. McGalliard v. Liberty Leasing Co., 534 P.2d 528 (Alaska 1975), overruled, Western Enters., Inc. v. Arctic Office Machs., Inc., 667 P.2d 1232 (Alaska 1983).

Factors in determining whether usurious loan involved. —

In determining whether a purported lease or sale arrangement involves a usurious loan, several indicia are frequently relied on by the courts. These include, but are not limited to, the following: (1) intention of any of the parties to create a loan or extension of credit; (2) discussion between the vendor and vendee of financing possibilities or efforts by the vendee to seek financing elsewhere; (3) existence of a close relationship between a vendor and a financier; (4) proof of a normal business practice to assign paper shortly after a transaction is consummated; (5) relation of the price the vendor receives for his paper and his cash selling price; and (6) computation of the excess (time-price) charges in a manner in which loan interest is usually computed. McGalliard v. Liberty Leasing Co., 534 P.2d 528 (Alaska 1975), overruled, Western Enters., Inc. v. Arctic Office Machs., Inc., 667 P.2d 1232 (Alaska 1983).

In its efforts to determine whether a purported lease or sale arrangement involves a usurious loan, the trial court must look to the essential relationship of the parties and the substance of the transaction, rather than to one isolated aspect of the transaction. McGalliard v. Liberty Leasing Co., 534 P.2d 528 (Alaska 1975), overruled, Western Enters., Inc. v. Arctic Office Machs., Inc., 667 P.2d 1232 (Alaska 1983).

In usurious transactions the parties are usually trying to disguise what they have done. It is to be expected that they will try to mold their deal so that it appears to be a legitimate sale and repurchase. Metcalf v. Bartrand, 491 P.2d 747 (Alaska 1971).

Hence, a court must look squarely at the real nature of the transaction, thus avoiding, so far as lies within its power, the betrayal of justice by the cloak of words, the contrivances of form, or the paper tigers of the crafty. A court is interested not in form or color but in nature and substance. Metcalf v. Bartrand, 491 P.2d 747 (Alaska 1971).

The presumption that a deed absolute is complete on its face, and that clear and convincing evidence is needed to overcome that presumption, is simply not applicable when it appears that there is usury involved. Metcalf v. Bartrand, 491 P.2d 747 (Alaska 1971).

Arbitration award violation of law. —

Arbitration award of 12 percent interest on late progress payments and retainage was an express violation of law where the contract between the parties provided that any moneys not due when paid would bear interest “at the legal rate in force.” Alaska State Hous. Auth. v. Riley Pleas, Inc., 586 P.2d 1244 (Alaska 1978).

Usurious interest on Ponzi scheme. —

Where bankruptcy trustee sued investors to recover double the usurious interest paid on investment contracts through debtors’ Ponzi scheme, recovery was barred because the debtors violated state securities law when issuing the investment contracts. In re Bonham Recovery Actions, 229 B.R. 438 (Bankr. D. Alaska 1999).

Transaction held usurious under this section. —

See Metcalf v. Bartrand, 491 P.2d 747 (Alaska 1971).

It was error to dismiss a debtor's usury counterclaim because (1) the debtor had standing, which was not waived, as the debtor's house's foreclosure satisfied debts from usurious loans on which the debtor paid, (2) a lender's funding fee was interest, so interest above the maximum rate was charged, even though the usury statute did not apply once loan modifications brought principal above $25,000, and the debtor could not recover until payments exceeded loan principal plus lawful interest, as (3) the lender's foreclosure sale proceeds paid all principal and interest, and (4) the claim was not time-barred, since foreclosure proceeds were paid shortly before the claim was raised. Bibi v. Elfrink, 408 P.3d 809 (Alaska 2017).

Interpretation of promissory note. —

Trial court properly granted summary judgment on debtor’s defense of usury where a promissory note between the debtor and lender, which was the contract between the parties, was construed in favor of its legality, and the amount of the loan was $26,000, which made this section inapplicable. Rockstad v. Erikson, 113 P.3d 1215 (Alaska 2005).

Collateral references. —

44B Am. Jur. 2d, Interest and Usury, § 45 et seq.

General characteristics and essentials of usury, 21 ALR 797, 53 ALR 743, 63 ALR 823, 105 ALR 795, 52 ALR2d 703.

Construction and effect of “future advances” clauses under UCC Article 9, 90 ALR4th 859.

Sec. 45.45.020. Higher rate of interest prohibited.

A person may not, directly or indirectly, receive in money, goods, or things in action, or in any other manner, a greater sum or value for the loan or use of money, or upon contract founded upon a bargain, sale, or loan of wares, merchandise, goods, chattels, lands, and tenements, than is prescribed in AS 45.45.010 45.45.070 .

History. (§ 25-1-2 ACLA 1949)

Notes to Decisions

What is deemed usury. —

As a general rule any benefit or advantage exacted by the lender from the borrower, whatever be its name or form, which, added to the interest taken or reserved, would yield to the lender a greater profit upon his loan than is allowed by law, is deemed usury. Fidelity Sec. Corp. v. Brugman, 137 Or. 38, 1 P.2d 131 (1931)(Construing similar Oregon statute)

Requisites for the presence of usury are (1) an unlawful intent; (2) the subject-matter must be money or money’s equivalent; (3) a loan or forbearance; (4) the sum loaned must be absolutely, not contingently, repayable; and (5) there must be an exaction for the use of the loan or something in excess of what is allowed by law. Lorber v. Marshall (Ore.), 264 P. 438 (1928), (Construing similar Oregon statute)

One of the requisite elements of a usurious contract is a corrupt intent to take more than the legal rate of interest for the sum loaned. Fidelity Sec. Corp. v. Brugman, 137 Or. 38, 1 P.2d 131 (1931)(Construing similar Oregon statute)

The essential elements of usury are: (1) an agreement to lend money or its equivalent or to forbear requiring repayment for a period of time; (2) a borrower’s obligation to repay absolutely, not upon some contingency; (3) greater compensation for making the loan or agreeing to forbear than allowed by the applicable state constitution or usury statute; and (4) an intention to violate the usury prohibition. Fikes v. First Fed. Sav. & Loan Ass'n, 533 P.2d 251 (Alaska 1975).

A third-party loan cloaked in the form of a lease is within the purview of the usury laws. McGalliard v. Liberty Leasing Co., 534 P.2d 528 (Alaska 1975), overruled, Western Enters., Inc. v. Arctic Office Machs., Inc., 667 P.2d 1232 (Alaska 1983).

Factors in determining whether usurious loan involved. —

In determining whether a purported lease or sale arrangement involves a usurious loan, several indicia are frequently relied on by the courts. These include, but are not limited to, the following: (1) intention of any of the parties to create a loan or extension of credit; (2) discussion between the vendor and vendee of financing possibilities or efforts by the vendee to seek financing elsewhere; (3) existence of a close relationship between a vendor and a financier; (4) proof of a normal business practice to assign paper shortly after a transaction is consummated; (5) relation of the price the vendor receives for his paper and his cash selling price; and (6) computation of the excess (time-price) charges in a manner in which loan interest is usually computed. McGalliard v. Liberty Leasing Co., 534 P.2d 528 (Alaska 1975), overruled, Western Enters., Inc. v. Arctic Office Machs., Inc., 667 P.2d 1232 (Alaska 1983).

In its efforts to determine whether a purported lease or sale arrangement involves a usurious loan, the trial court must look to the essential relationship of the parties and the substance of the transaction, rather than to one isolated aspect of the transaction. McGalliard v. Liberty Leasing Co., 534 P.2d 528 (Alaska 1975), overruled, Western Enters., Inc. v. Arctic Office Machs., Inc., 667 P.2d 1232 (Alaska 1983).

Transaction held usurious under this section. —

Where the interest rate on the repurchase price at which a borrower could obtain her property from the lender included interest included in the principal, the resulting interest rate was usurious. Metcalf v. Bartrand, 491 P.2d 747 (Alaska 1971).

It was error to dismiss a debtor's usury counterclaim because (1) the debtor had standing, which was not waived, as the debtor's house's foreclosure satisfied debts from usurious loans on which the debtor paid, (2) a lender's funding fee was interest, so interest above the maximum rate was charged, even though the usury statute did not apply once loan modifications brought principal above $25,000, and the debtor could not recover until payments exceeded loan principal plus lawful interest, as (3) the lender's foreclosure sale proceeds paid all principal and interest, and (4) the claim was not time-barred, since foreclosure proceeds were paid shortly before the claim was raised. Bibi v. Elfrink, 408 P.3d 809 (Alaska 2017).

Arbitration award violation of law. —

Arbitration award of 12 percent interest on late progress payments and retainage was an express violation of law where the contract between the parties provided that any moneys not due when paid would bear interest “at the legal rate in force.” Alaska State Hous. Auth. v. Riley Pleas, Inc., 586 P.2d 1244 (Alaska 1978).

Usurious interest on Ponzi scheme. —

Where bankruptcy trustee sued investors to recover double the usurious interest paid on investment contracts through debtors’ Ponzi scheme, recovery was barred because the debtors violated state securities law when issuing the investment contracts. In re Bonham Recovery Actions, 229 B.R. 438 (Bankr. D. Alaska 1999).

Collateral references. —

45 Am. Jur. 2d, Interest and Usury, § 1 et seq.

Sec. 45.45.030. Action for recovery of double amount of usurious interest paid.

If interest greater than that prescribed in AS 45.45.010 and 45.45.020 is received or collected, the person paying it may, by action brought within two years after the payment, recover from the person receiving the payment double the amount of the interest received or collected.

History. (§ 25-1-3 ACLA 1949)

Notes to Decisions

This section was adopted from the statutes of Texas. Werner v. Lorentzen, 3 Alaska 275 (D. Alaska 1907).

This section is practically a copy of article 3106 of the Revised Statutes of Texas of 1895. Lindeberg v. Doverspike, 2 Alaska 175, 2 Alaska 177 (D. Alaska 1904).

Section provides exclusive form of relief. —

The action provided for by this section is the only and exclusive form of relief provided by the law. Lorentzen v. Warner, 3 Alaska 218 (D. Alaska 1906).

Action must be brought within two years of last payment of interest. —

A party can have a double recovery under this section if he brings an action within two years of his last payment of interest. Metcalf v. Bartrand, 491 P.2d 747 (Alaska 1971).

When interest “received or collected”. —

Interest cannot be said to have been “received or collected” in excess of what may be lawfully “received or collected” until the lender has in fact, after giving credit for all payments, collected or received more than the sum loaned with lawful interest. Werner v. Lorentzen, 3 Alaska 275 (D. Alaska 1907).

Actual payment prerequisite to maintaining action. —

Before an action may be maintained under this section, the debtor must have actually paid an amount in excess of the principal and legal interest. Werner v. Lorentzen, 3 Alaska 275 (D. Alaska 1907).

This section permits a debtor to recover under this provision only when he has paid a sum greater than the principal plus lawful interest. McGalliard v. Liberty Leasing Co., 534 P.2d 528 (Alaska 1975), overruled, Western Enters., Inc. v. Arctic Office Machs., Inc., 667 P.2d 1232 (Alaska 1983).

It was error to dismiss a debtor's usury counterclaim because (1) the debtor had standing, which was not waived, as the debtor's house's foreclosure satisfied debts from usurious loans on which the debtor paid, (2) a lender's funding fee was interest, so interest above the maximum rate was charged, even though the usury statute did not apply once loan modifications brought principal above $25,000, and the debtor could not recover until payments exceeded loan principal plus lawful interest, as (3) the lender's foreclosure sale proceeds paid all principal and interest, and (4) the claim was not time-barred, since foreclosure proceeds were paid shortly before the claim was raised. Bibi v. Elfrink, 408 P.3d 809 (Alaska 2017).

The plaintiff is entitled to recover double the amount of the whole interest paid. Lindeberg v. Doverspike, 2 Alaska 175, 2 Alaska 177 (D. Alaska 1904).

And not merely double the amount of the excess or usurious interest. —

Lindeberg v. Doverspike, 2 Alaska 175, 2 Alaska 177 (D. Alaska 1904).

This section does not require an averment that the defendant knowingly received usurious interest. Washington-Alaska Bank v. Stewart, 184 F. 673, 3 Alaska Fed. 551 (9th Cir. Alaska 1911).

Recovery barred on Ponzi scheme. —

Where bankruptcy trustee sued investors to recover double the usurious interest paid on investment contracts through debtors’ Ponzi scheme, recovery was barred because the debtors violated state securities law when issuing the investment contracts. In re Bonham Recovery Actions, 229 B.R. 438 (Bankr. D. Alaska 1999).

Cited in

Berger v. State, 910 P.2d 581 (Alaska 1996).

Sec. 45.45.040. Usurious rate as working forfeiture of entire interest.

If, in an action brought on a contract, the court determines that a rate of interest has been contracted for greater than is authorized by AS 45.45.010 45.45.070 , either directly or indirectly, in money, property, or other valuable thing, or that a gift or donation of money, property, or other valuable thing has been made or promised to be made to a lender or creditor, or to a person for the lender or creditor, directly or indirectly, by the borrower or debtor, or a person for the borrower or debtor, the design of which is to obtain for money so loaned, or for debts due or to become due, a rate of interest greater than that specified by AS 45.45.010 45.45.070 , the rate of interest is usurious and works a forfeiture of the entire interest on the debt. The court shall give judgment for the amount due, without interest, on the sum loaned or the debt contracted, against the defendant and in favor of the plaintiff and against the plaintiff for costs of action, whether the action is contested or not.

History. (§ 25-1-4 ACLA 1949)

Notes to Decisions

Usury laws are designed to protect the necessitous borrower. Metcalf v. Bartrand, 491 P.2d 747 (Alaska 1971).

Usurious interest may be deducted in determining whether loan is excessive. —

In an action by a national banking association against one of its directors to recover damages alleged to have been caused by an excessive loan in violation of the provisions of the National Banking Act, the directors will be permitted to show the nature and origin of the entire transaction, and usurious interest found to be included with the principal of the note will be deducted in determining whether or not the loan is excessive. First Nat'l Bank v. Noyes, 5 Alaska 637 (D. Alaska 1917), aff'd, 257 F. 593, 4 Alaska Fed. 774 (9th Cir. Alaska 1919).

Section to be followed in all cases involving usurious interest. —

This section is to be followed and observed in any and every action where it is shown to the court that usurious interest has been charged. First Nat'l Bank v. Noyes, 5 Alaska 637 (D. Alaska 1917), aff'd, 257 F. 593, 4 Alaska Fed. 774 (9th Cir. Alaska 1919).

This section works an automatic forfeiture of profits under a usurious contract. This section unequivocally requires that a usurious rate of interest “works a forfeiture of the entire interest on the debt.” Metcalf v. Bartrand, 491 P.2d 747 (Alaska 1971).

This section contains no limitation on recovery as does AS 45.45.030 . McGalliard v. Liberty Leasing Co., 534 P.2d 528 (Alaska 1975), overruled, Western Enters., Inc. v. Arctic Office Machs., Inc., 667 P.2d 1232 (Alaska 1983).

This section makes no requirement that the victim of the usury take affirmative action. Metcalf v. Bartrand, 491 P.2d 747 (Alaska 1971).

And it contemplates that the aggrieved party will be the defendant. Metcalf v. Bartrand, 491 P.2d 747 (Alaska 1971).

Presumption of intent to exact usury. —

Unless the applicable statute requires knowledge or willfulness (which this section does not) then the intent required to constitute usury is not necessarily a consciousness of the illegality of the transaction. It is sufficient that the loan contract unequivocally calls for an excessive rate of return on the indebtedness. In such case, the intent to exact usury is presumed. Metcalf v. Bartrand, 491 P.2d 747 (Alaska 1971).

An intention to violate the usury law will be presumed when the loan agreement unequivocally calls for an impermissible rate of return on the indebtedness. Fikes v. First Fed. Sav. & Loan Ass'n, 533 P.2d 251 (Alaska 1975).

This section expressly modifies Civil Rule 82 with regard to attorney fees. Metcalf v. Bartrand, 491 P.2d 747 (Alaska 1971).

Application where interest rate on construction loan was seemingly within statutory limits but where “loan fee” was also charged. —

Where bank charged a one and one-half percent loan fee in addition to interest, which was in addition to fees for specific services, factual questions to be considered on remand include: what charges, if any, the loan fee was designed to defray; whether the amount of the loan fee was dependent on the amount of the loan or the risk of the enterprise being financed; whether the loan fee and interest rate were charged on the entire amount regardless of the size and period of outstanding balances; and how the bank treated, for internal accounting, the loan fee and the interest. Fikes v. First Fed. Sav. & Loan Ass'n, 533 P.2d 251 (Alaska 1975).

Collateral references. —

Liability for the statutory penalty of persons other than the offending lender in a usurious loan transaction, 4 ALR3d 650.

Validity and construction of provision (escalator clause) in land contract or mortgage that rate of interest payable shall increase if legal rate is raised, 60 ALR3d 473.

Validity and construction of provision imposing “late charge” or similar exaction for delay in making periodic payments on note, mortgage, or installment sale contract, 63 A.L.R.3d 50.

Usury as affected by acceleration clause, 66 ALR3d 650.

Validity under usury laws of provision calling for repayment of principal which exceeds sum loaned by amount reflecting any decline in purchasing power of dollar, 90 ALR3d 763.

Contingency as to borrower’s receipt of money or other property from which loan is to be repaid as rendering loan usurious, 92 ALR3d 623.

Leaving part of loan on deposit with lender as usury, 92 ALR3d 769.

Enforceability of provision in loan commitment agreement authorizing lender to charge “standby” fee, “commitment” fee, or similar deposit, 93 ALR3d 1156.

Application of usury laws to transactions characterized as “leases,” 94 ALR3d 640.

Sec. 45.45.050. Recovery by assignee of usurious contract of amount paid.

AS 45.45.010 45.45.070 do not prevent the bona fide assignee of a usurious contract from recovering against the immediate assignor, or the original usurer, the full amount paid by the assignee for the contract if the assignee did not have notice of the usury affecting the contract.

History. (§ 25-1-5 ACLA 1949)

Sec. 45.45.060. Contract not usurious because of agreement to pay taxes.

A contract made in the state between borrower and lender, debtor and creditor, or mortgagor and mortgagee, on which the rate of interest is the legal rate of interest specified in AS 45.45.010 or less, by which one party agrees to pay the taxes on the debt, credit, or mortgage existing or entered into between the parties, is legal and valid and is not usurious.

History. (§ 25-1-6 ACLA 1949; am § 3 ch 94 SLA 1969)

Collateral references. —

Effect of provision requiring borrower to pay taxes, 21 ALR 880, 53 ALR 756, 63 ALR 823, 105 ALR 795, 52 ALR2d 703.

Sec. 45.45.070. Enforcement of contracts entered into under AS 45.45.060.

A contract entered into under AS 45.45.060 may be enforced by the parties to it. However in making an assessment of a credit loan or mortgage, it shall be assessed to the holder of the contract.

History. (§ 25-1-7 ACLA 1949)

Article 2. Collection of Advance Interest.

Sec. 45.45.080. Money lenders may collect interest in advance.

  1. A lender of money may, either upon the security of personal property or otherwise, charge and receive interest in advance.
  2. In the case of a secured or unsecured instrument loan not exceeding the principal amount of $10,000 (not including interest) which is repayable in substantially equal installments over a period not exceeding seven years, a lender of money may contract for a charge at a rate not exceeding $6 a year for each $100 (true annual interest rate for “add-on method” of computation at a rate not to exceed 11.1 percent; or true annual interest rate for “discount method” of computation at a rate not to exceed 11.8 percent) upon the original face amount of the instrument evidencing the loan for the entire period of the loan. This charge may be collected in advance.  However, if the unpaid balance outstanding on a loan is paid before maturity, the lender shall give a refund or credit of the unearned portion of the charge, which refund or credit represents at least as great a proportion of the original charge as the sum of the periodical time balances after the date of prepayment bears to the sum of all the periodical time balances under the schedule of payments in the original instrument.  The lender is not required to refund or credit any portion of the unearned charge that would result in a net charge on a loan less than the minimum charge provided for in this section, or to make a refund or credit where the amount of the refund or credit computed as set out in this section would be less than $5 for each loan paid before the maturity date.
  3. No additional amount may be charged or contracted for on or in connection with an installment loan provided for in (b) of this section except the following:
    1. delinquency charges not to exceed five cents for each $1 of each installment more than 15 days in arrears, except that the total delinquency charges on an installment loan may not exceed $15, and only one delinquency charge may be made on each installment;
    2. premiums paid by the lender for insurance required or obtained as security for or by reason of the installment loan;
    3. the amounts necessary to reimburse the lender for fees paid to a public officer for filing, recording, or releasing any instrument or lien; and
    4. the actual expenditures, including reasonable attorneys’ fees for legal process or proceedings, to secure or collect the installment loan.
  4. Advertising concerning such installment loans that contains a statement of an amount, or rate of charge, must also contain the percentage rate, either per month or per year, computed on declining balances of the face amount of the loan instrument to which the charge would be equivalent if the loan were repaid according to contract. This advertising requirement may be complied with by stating the equivalent percentage rate that would earn the charge for a loan repayable in 12 equal consecutive monthly installments, and the stated rate may be closely approximate, rather than exact, if the statement so indicates.  This requirement does not apply to an advertisement in which an amount, or rate of charge, is indicated only by a table that contains and is confined to examples of the face amount of the loan instrument, the proceeds to the borrower exclusive of the charge, and the amount, number, and intervals of the required payments.

History. (§ 1 ch 48 SLA 1951; am §§ 1, 2 ch 71 SLA 1968)

Opinions of attorney general. —

Those required to be licensees under the Small Loans Act (AS 06.20) are “lenders of money.” 1963 Alas. Op. Att'y Gen. No. 16.

The bona fide purchase of installment contract paper is an activity distinct from the lending of money and a discount at any rate is not usurious unless the transfer is merely a cloak for a usurious loan. 1963 Alas. Op. Att'y Gen. No. 16.

The act of charging an interest rate in excess of that prescribed in subsection (b) of this section on a loan in excess of $1,000 is grounds for revocation of the lender’s small loan license, regardless of whether the loan is consummated or administered in the same place of business. 1963 Alas. Op. Att'y Gen. No. 16.

Collateral references. —

45 Am. Jur. 2d Interest and Usury, § 151 et seq.

Construction and effect of “future advances” clauses under UCC Article 9, 90 ALR4th 859.

Sec. 45.45.090. Applicability of other laws.

No law of this state prescribing or limiting interest rates upon loans applies to loans made under AS 45.45.080 .

History. (§ 2 ch 48 SLA 1951)

Article 3. Merchandise.

Sec. 45.45.100. Requiring individuals to keep merchandise in full view.

A merchant may request an individual on the merchant’s premises to place or keep in full view merchandise that the individual removes, or that the merchant believes the individual may have removed, from its place of display or elsewhere, whether for examination, purchase, or another purpose. A merchant is not criminally or civilly liable for making this request.

History. (§ 2 ch 4 SLA 1957)

Sec. 45.45.105. Unsolicited merchandise.

  1. A person may not offer merchandise for sale, in any manner, when the offer includes the voluntary and unsolicited sending of merchandise not actually ordered or requested by the recipient, either orally or in writing.
  2. Unsolicited merchandise received shall be considered an unconditional gift to the recipient who may use or dispose of it in any manner the recipient sees fit without obligation to the sender.

History. (§ 1 ch 39 SLA 1969)

Sec. 45.45.110. Definitions.

In AS 45.45.100 and 45.45.105 ,

  1. “merchandise” means personal property capable of manual delivery that is produced, displayed, held, or offered for sale by a manufacturer, distributor, or merchant;
  2. “merchant” means an owner or operator of a place of business used for displaying, holding, or selling personal property capable of manual delivery, and the agent, consignee, employee, lessee, or officer of the owner or operator;
  3. “premises” means an establishment or part of one in which merchandise is displayed, held, or offered for sale.

History. (§ 1 ch 4 SLA 1957; am § 2 ch 39 SLA 1969)

Article 4. Funerals.

Sec. 45.45.120. Disclosure of costs.

Every person performing or arranging for services or providing merchandise relating to the disposition of a dead human body shall give to the person arranging for the disposition at the time the arrangements are completed and before the time of rendering the service or providing the merchandise a written statement showing, to the extent then reasonably ascertainable,

  1. the price and what is included with specific prices for at least each of the following:
    1. transfer of remains to funeral home;
    2. embalming;
    3. use of facilities for viewing;
    4. use of facilities for funeral service;
    5. caskets, with a notation that a separate casket price list will be provided before any sales presentation for caskets is made;
    6. hearse;
    7. limousine;
    8. services of funeral director and staff;
    9. outer interment receptacles; if outer interment receptacles are sold, a notation that a separate outer interment receptacle price list will be provided before any sales presentation for such items is made;
  2. the price of each supplemental item of service or merchandise;
  3. the amount involved for each of the items for which money will be advanced; an item for which money is advanced shall be charged in the same amount as the cost to the person making the advance;
  4. the method of payment;
  5. the fee for counseling, consulting, or arranging for future services relating to the disposition of a dead human body.

History. (§ 2 ch 197 SLA 1976)

Article 5. Regulation of Motor Vehicle Repairs.

Cross references. —

For failure to comply with AS 45.45.130 45.45.240 as an unlawful trade practice, see AS 45.50.471(b) .

Sec. 45.45.130. Repair order.

Upon request of the customer and before the commencement of repairs, the shop shall provide the customer with a copy of a dated repair order legibly describing the repairs to be performed. The shop shall record the odometer reading of the customer’s motor vehicle on the repair order, and shall sign the customer’s copy.

History. (§ 1 ch 146 SLA 1976)

Notes to Decisions

Cited in

State v. Grogan, 628 P.2d 570 (Alaska 1981).

Sec. 45.45.140. Repair price information.

Upon request of the customer and before the commencement of repairs, the shop shall provide the customer with a price estimate for the repairs. The repair price estimate shall be made in good faith by the shop and may not be exceeded except for good cause and additional charges over the price estimate may not be incurred without approval of the customer. Nothing in this section may be construed as requiring a shop to provide a price estimate if the shop does not agree to perform the requested repairs.

History. (§ 1 ch 146 SLA 1976)

Sec. 45.45.150. Notice to customer.

The shop shall post a conspicuously located and easily readable sign that states:

“You are entitled to a price estimate for the repairs you authorize if you request the estimate before the repairs are begun. This price estimate will not be exceeded if the motor vehicle is delivered to the shop within five days. After the motor vehicle is delivered to the shop the repair price may be less than the estimate but will not exceed the estimate without your permission. Your signature on the repair order will indicate your authorization of repairs at the price estimated.

You are entitled to the return of any or all replaced parts, except parts which must be returned to a manufacturer because of warranty and/or exchange agreement, if you request the parts at the time your order is taken. Those parts which must be returned to the manufacturer will be made available for inspection to you when you pick up your vehicle if you request the parts at the time your repair order is taken.”

History. (§ 1 ch 146 SLA 1976)

Sec. 45.45.160. Charges.

A shop may not charge for making a repair price estimate unless, before making the estimate, the shop discloses to the customer the amount of the charge, or, if the amount cannot be determined, the basis on which the charge will be calculated. A shop may not impose, or threaten to impose, a charge that is clearly excessive in relation to the work involved in making the price estimate.

History. (§ 1 ch 146 SLA 1976)

Sec. 45.45.170. Authorization to proceed with repairs.

  1. If the shop has given the customer an estimate and the price for the authorized repairs will exceed the estimate, the shop shall call the customer before continuing with the repairs and shall provide the customer with a new, good faith estimate of the repair price.  The shop may not then continue with the repairs until it receives the customer’s written or oral authorization to do so.
  2. Before undertaking repairs other than those previously authorized by the customer, the shop shall call the customer and provide the customer with a description of the proposed additional repairs, together with a good faith estimate of the price for the repairs.  The shop may not then undertake the additional repairs until it receives the customer’s written or oral authorization to do so.
  3. If the shop does not receive the customer’s authorization to proceed with the repairs under (a) or (b) of this section, the shop shall either agree to perform the repairs at the original estimated price or provide for the customer to retake possession of the vehicle in at least as good condition as it was delivered to the shop and notify the customer accordingly.
  4. A written authorization under (a) or (b) of this section shall be made on the repair order or on the invoice when a repair order is not requested and shall specify newly authorized repairs, as well as the newly authorized repair price estimate.  If authorization under (a) or (b) of this section is received orally, the shop shall specify on the repair order or invoice newly authorized repairs, as well as the newly authorized repair price estimate.  It shall also specify the date and time of authorization, and the person and telephone number called.

History. (§ 1 ch 146 SLA 1976)

Sec. 45.45.180. Return of parts.

Parts from a customer’s motor vehicle that are replaced by the shop shall be returned to the customer if they are requested by the customer at the time the repair order is taken. However, parts that must be returned to the manufacturer because of a warranty or exchange agreement need not be returned to the customer upon request but shall instead be made available for the customer’s inspection when the customer retakes possession of the motor vehicle.

History. (§ 1 ch 146 SLA 1976)

Sec. 45.45.190. Invoice.

The shop shall provide every customer, at the time the customer retakes possession of the motor vehicle, with a copy of a dated invoice detailing the costs of all parts and labor involved in the repair, and identifying all parts replacements as being either new, used, rebuilt, or reconditioned.

History. (§ 1 ch 146 SLA 1976)

Sec. 45.45.200. Prohibited practices.

  1. A shop may not misrepresent, directly or by implication,
    1. the cost of repairs authorized by the customer;
    2. the terms or conditions of a warranty or service agreement;
    3. that repairs are necessary;
    4. that repairs have been made; or
    5. that the motor vehicle is in a dangerous condition, or that the customer’s continued use of the motor vehicle will be hazardous to persons or harmful to the motor vehicle.
  2. A shop may not collect or attempt to collect for
    1. repairs not authorized either orally or in writing by the customer;
    2. repairs that the shop knew or reasonably ought to have known to be unnecessary; or
    3. repairs that have not been made.
  3. A shop that is also a warrantor or a party to a service agreement may not refuse to repair a motor vehicle in accordance with the terms and conditions of the warranty or service agreement.
  4. A shop may not fail to return a customer’s motor vehicle because the customer has refused to pay for unauthorized repairs, or because the customer has refused to pay repair charges in excess of the price authorized under AS 45.45.130 45.45.140 , if the customer pays the authorized price for the authorized repairs.
  5. A shop may not alter a customer’s motor vehicle with intent to create a condition requiring repairs.

History. (§ 1 ch 146 SLA 1976; am § 35 ch 3 SLA 2017)

Effect of amendments. —

The 2017 amendment, effective July 1, 2017, in (b)(2), substituted “repairs that” for “repairs which” at the beginning.

Sec. 45.45.210. Disclosure of regulation.

The following statement shall be conspicuously printed, either on the invoice or on another form given to every customer for whom the shop performs repairs:

“Motor vehicle repair trade practices are regulated by Alaska Statutes 45.45.130 — 45.45.240, administered by the Alaska Department of Law.”

History. (§ 1 ch 146 SLA 1976; am § 63 ch 35 SLA 2003)

Sec. 45.45.220. Records.

A shop shall maintain repair records and invoices for parts purchased by the shop. The records shall be available for reasonable inspection by the attorney general or other persons acting at the request of the attorney general and shall be retained for at least two years.

History. (§ 1 ch 146 SLA 1976)

Sec. 45.45.240. Definitions.

In AS 45.45.130 45.45.240

  1. “customer” includes a person authorized by the customer to act on the customer’s behalf;
  2. “motor vehicle” or “vehicle” means a motor vehicle as defined in AS 28.90.990 that is required to be registered under AS 28.10, or with a governmental agency of another jurisdiction performing a similar function;
  3. “shop” means an individual, corporation, partnership, or other form of business organization engaged in the motor vehicle repair business and includes owners, officers, directors, agents, employees, and representatives but excludes the following:
    1. a shop engaged solely in the business of repairing the motor vehicles of a single commercial, industrial, or governmental establishment, or of two or more of these establishments that are related by common ownership or corporation affiliation;
    2. a person repairing the person’s own or a family member’s motor vehicle;
  4. “repair” or “repairs” means the improvement, adjustment, replacement, examination, diagnosis, maintenance, servicing, removal, or installation of any component or part of a motor vehicle, but does not include towing or the supplying of motor fuel to a motor vehicle.

History. (§ 1 ch 146 SLA 1976; am § 21 ch 144 SLA 1977; am § 36 ch 3 SLA 2017)

Revisor’s notes. —

In 2006, in (2) of this section, “AS 28.90.990 ” was substituted for “AS 28.40.100 ” to reflect the 2006 renumbering of AS 28.40.100 .

Effect of amendments. —

The 2017 amendment, effective July 1, 2017, in (3), deleted “‘motor vehicle repair shop’ or” at the beginning.

Article 6. Motor Vehicle Warranties.

Opinions of attorney general. —

The Better Business Bureau’s auto line informal dispute resolution mechanism pursuant to this article is in substantial compliance with 16 C.F.R. Part 703, setting forth the standards for informal dispute settlement procedures. 1986 Alas. Op. Att'y Gen. No. 01.

Notes to Decisions

Cited in

Universal Motors v. Waldock, 719 P.2d 254 (Alaska 1986).

Sec. 45.45.300. Repairs required.

If a new motor vehicle does not conform to an express warranty that is applicable to it and the owner of the vehicle reports the defect or condition to the manufacturer of the vehicle or to the manufacturer’s or distributor’s dealer during the term of the warranty, the manufacturer, distributor, dealer, or a repairing agent shall make the necessary repairs to conform the vehicle to the express warranty.

History. (§ 1 ch 101 SLA 1984)

Revisor’s notes. —

As enacted, this section contained subsections (b)-(m). They were renumbered in 1984 as AS 45.45.305 45.45.360 .

Opinions of attorney general. —

An informal dispute resolution mechanism was found to be in substantial compliance with 16 C.F.R. Part 703. April 28, 1986 Alas. Op. Att'y Gen. No. 1.

An informal dispute resolution mechanism was found not to be in compliance with 16 C.F.R. Part 703. November 13, 1985 Alas. Op. Att'y Gen. No. 5; December 31, 1985 Alas. Op. Att'y Gen. No. 6.

Collateral references. —

Validity, construction and effect of state motor vehicle warranty legislation, 88 ALR5th 301.

Sec. 45.45.305. Replacement or refund.

If during the term of the express warranty or within one year from the date of delivery of the motor vehicle to the original owner, whichever period terminates first, the manufacturer, distributor, dealer, or repairing agent is unable to conform the motor vehicle to an applicable express warranty after a reasonable number of attempts, the manufacturer or distributor shall accept the return of the nonconforming motor vehicle, and, at the owner’s option, shall replace the nonconforming vehicle with a new, comparable vehicle or shall refund the full purchase price to the owner less a reasonable allowance for the use of the motor vehicle from the time it was delivered to the original owner. A refund under this section shall be made to a lienholder of record, if any, and the owner, as their interests may appear.

History. (§ 1 ch 101 SLA 1984)

Revisor’s notes. —

Enacted as AS 45.45.300(b). Renumbered in 1984.

Sec. 45.45.310. Notice by owner.

In order to claim a refund or replacement under AS 45.45.305 , the owner shall give written notice by certified mail to the manufacturer and its dealer or repairing agent at any time before 60 days have elapsed after the expiration of the express warranty or the one-year period after the date of delivery of the motor vehicle to the original owner, whichever period terminates first, (1) stating that the vehicle has a nonconformity; (2) providing a reasonable description of the nonconformity; (3) stating that the manufacturer, distributor, dealer, or repairing agent has made a reasonable number of attempts to conform the vehicle; and (4) stating that the owner demands a refund or replacement vehicle to be delivered on the 60th day after the mailing of the written notice. Within 30 days after receiving the notice required by this section the manufacturer may make a final attempt to conform the vehicle before a refund or replacement is made under AS 45.45.305 .

History. (§ 1 ch 101 SLA 1984)

Revisor’s notes. —

Enacted as AS 45.45.300(c). Renumbered in 1984.

Sec. 45.45.315. Exceptions.

An owner may not receive a refund or replacement under AS 45.45.300 45.45.360 if the manufacturer or distributor shows that the nonconformity complained of

  1. does not substantially impair either the use or the market value of the motor vehicle; or
  2. is the result of
    1. alteration of the motor vehicle by the owner or a person other than a dealer or repairing agent that is not authorized by the manufacturer or distributor; or
    2. abuse or neglect by the owner or a person other than the dealer or repairing agent.

History. (§ 1 ch 191 SLA 1984)

Revisor’s notes. —

Enacted as AS 45.45.300(d). Renumbered in 1984.

Sec. 45.45.320. Presumption.

A presumption that a reasonable number of attempts have been made to conform a motor vehicle under an applicable express warranty is established if:

  1. the same nonconformity has been subject to repair three or more times by the manufacturer, distributor, dealer, or repairing agent during the term of the express warranty or the one-year period after delivery of the motor vehicle to the original owner, whichever period terminates first, but the nonconformity continues to exist; or
  2. the vehicle is out of service for repair for a total of 30 or more business days during the express warranty term or the one-year period referred to in (1) of this section, whichever period terminates first; any period of time that repairs are not performed for reasons that are beyond the control of the manufacturer, distributor, dealer, or repairing agent is excluded from the 30-day time period referred to in this paragraph.

History. (§ 1 ch 101 SLA 1984)

Revisor’s notes. —

Enacted as AS 45.45.300(e). Renumbered in 1984.

Sec. 45.45.325. Parts availability.

A manufacturer whose vehicles are sold in the state through an authorized dealer shall provide its dealer or repairing agent with any part necessary to make a repair of a nonconformity covered under an express warranty, as soon as possible, without additional charge for freight or handling, if the part is not in the dealer’s or agent’s inventory when the nonconforming vehicle is brought to the dealer or repairing agent for repair.

History. (§ 1 ch 101 SLA 1984)

Revisor’s notes. —

Enacted as AS 45.45.300(f). Renumbered in 1984.

Sec. 45.45.330. Failure to replace or refund.

A manufacturer or distributor who fails to refund the full purchase price of a motor vehicle or replace the motor vehicle when there is a requirement to do so under AS 45.45.300 45.45.360 is presumed to have committed an unfair trade practice under AS 45.50.471 .

History. (§ 1 ch 101 SLA 1984)

Revisor’s notes. —

Enacted as AS 45.45.300(g). Renumbered in 1984.

Sec. 45.45.335. Resale without disclosure prohibited.

A motor vehicle returned under AS 45.45.305 may not be resold by the manufacturer or distributor in the state unless full disclosure of the reason for the return is made to the prospective buyer before the resale is concluded.

History. (§ 1 ch 101 SLA 1984)

Revisor’s notes. —

Enacted as AS 45.45.300(h). Renumbered in 1984.

Sec. 45.45.340. Other rights and remedies.

The provisions of AS 45.45.300 45.45.360 do not limit other rights and remedies that may be available to the owner of a motor vehicle under other provisions of law. This section does not create a new cause of action against a dealer or repairing agent who sells or attempts to repair a motor vehicle found to be nonconforming under AS 45.45.300 45.45.360 .

History. (§ 1 ch 101 SLA 1984)

Revisor’s notes. —

Enacted as AS 45.45.300(i). Renumbered in 1984.

Sec. 45.45.345. Repair facilities.

A manufacturer or distributor of motor vehicles who authorizes the sale of the manufacturer’s or distributor’s motor vehicles in the state shall maintain authorized dealership facilities within the state that are able to perform the service and make the repairs required by the manufacturer’s express warranty and by AS 45.45.300 45.45.360 .

History. (§ 1 ch 101 SLA 1984)

Revisor’s notes. —

Enacted as AS 45.45.300(j). Renumbered in 1984.

Sec. 45.45.350. Reimbursement of shipping costs.

A manufacturer or distributor who accepts the return of a nonconforming motor vehicle under AS 45.45.305 shall reimburse the owner for any reasonable cost incurred in shipping the vehicle to and from the nearest authorized facility for warranty service and repair of a nonconformity that causes the return of the vehicle.

History. (§ 1 ch 101 SLA 1984)

Revisor’s notes. —

Enacted as AS 45.45.300(k). Renumbered in 1984.

Sec. 45.45.355. Arbitration or mediation.

If a manufacturer or distributor has established an informal dispute settlement procedure that substantially complies with the requirements of 16 C.F.R. Part 703, as that section may be amended, or if the manufacturer or distributor, after receipt of notice required by AS 45.45.310 , offers in writing to participate in an arbitration or mediation process with the owner and the arbitration or mediation decision is binding on the manufacturer or distributor but not on the owner, and if the informal dispute settlement or arbitration or mediation process is approved by the attorney general, the provisions of AS 45.45.305 concerning refund or replacement or AS 45.45.350 concerning shipping costs do not apply to an owner who has not first resorted to the informal dispute settlement procedure or arbitration or mediation process.

History. (§ 1 ch 101 SLA 1984; am § 44 ch 22 SLA 2015)

Revisor’s notes. —

Enacted as AS 45.45.300(l). Renumbered in 1984.

Effect of amendments. —

The 2015 amendment, effective July 1, 2015, substituted “16 C.F.R. Part 703” for “16 C.F.R. 703”.

Opinions of attorney general. —

Request for approval of Ford Motor Company’s Consumer Appeals Board informal dispute mechanism was denied because it did not substantially comply with 16 C.F.R. Part 703, especially that portion requiring that board members be sufficiently insulated from the warrantor so that decisions are not influenced by the warrantor. 1985 Alas. Op. Att'y Gen. No. 06.

Sec. 45.45.360. Definitions.

In AS 45.45.300 45.45.360 ,

  1. “dealer” means a person who has obtained a franchise from, or is authorized by, a motor vehicle manufacturer to engage in the retail sale and warranty repair of the manufacturer’s new motor vehicles in the state;
  2. “distributor” means a person who is authorized by a manufacturer to engage in the wholesale distribution of the manufacturer’s new motor vehicles in the state;
  3. “express warranty” or “warranty” means an express written warranty provided by the manufacturer of a new motor vehicle;
  4. “full purchase price” means the total price paid for a motor vehicle by the original owner, including costs added to the retail price, such as original registration fees, transportation fees, dealer preparation, and dealer installed options;
  5. “manufacturer” means a person who by labor transforms raw materials and component parts into motor vehicles for wholesale or retail sale;
  6. “motor vehicle” or “vehicle” means a land vehicle having four or more wheels, that is self-propelled by a motor, is normally used for personal, family, or household purposes, and is required to be registered under AS 28.10, but does not include a tractor, farm vehicle, or a vehicle designed primarily for off-road use;
  7. “nonconformity” means a defect or condition in a motor vehicle caused by a manufacturer, distributor, dealer, or repairing agent that substantially impairs the use or market value of a vehicle;
  8. “owner” means a purchaser, other than for resale, of a new motor vehicle, and a person to whom ownership of the motor vehicle is transferred in conformity with AS 28;
  9. “reasonable allowance” means an amount attributable to an owner’s use of a motor vehicle; a “reasonable allowance” may not exceed an amount equal to the depreciation in value of the vehicle for the period during which the vehicle is available for use by the owner, calculated by a straight line depreciation method over seven years, plus an amount equal to the depreciation in value of the vehicle that is caused by
    1. any neglect or abuse by the owner; or
    2. body damage not caused by a nonconformity;
  10. “repairing agent” means a person who has been specifically authorized by a motor vehicle manufacturer or distributor to perform warranty repairs in the state on one or more of the manufacturer’s or distributor’s motor vehicles;
  11. “substantially impairs the market value” means a nonconformity that substantially decreases the dollar value of a vehicle to the owner when compared to the dollar value of a similar vehicle that does not have the nonconformity;
  12. “substantially impairs the use” means a nonconformity that prevents a motor vehicle from being operated or makes the vehicle unsafe to operate.

History. (§ 1 ch 101 SLA 1984)

Revisor’s notes. —

Enacted as AS 45.45.300(m). Renumbered in 1984.

Article 7. Used Vehicle Sales in Emission Inspection Areas.

Sec. 45.45.400. Prohibited transfer of used motor vehicles.

  1. A person engaged in the business of selling used motor vehicles may not transfer or assign the owner’s title or interest in the used vehicle to a person who resides in an area subject to a state-approved emission inspection program established under AS 46.14.400 or 46.14.510 and who intends to use the vehicle in that area, unless the vehicle displays a valid emissions inspection decal, has a valid record of emissions inspection with the Department of Administration, or has a certificate of inspection, even though the certificate shows that the vehicle is not in compliance with program requirements as required under the air pollution control requirements applicable in that area.
  2. This section does not apply to a motor vehicle that when manufactured did not have a pollution control system.

History. (§ 1 ch 118 SLA 1992; am § 15 ch 74 SLA 1993; am § 4 ch 97 SLA 2003)

Cross references. —

For violation of this section as an unlawful trade practice, see AS 45.50.471(b) .

Article 8. Rental Car Fees.

Cross references. —

For legislative findings and statement of intent applicable to the enactment of this article, see § 1, ch. 50, SLA 2010, in the 2010 Temporary and Special Acts.

Effective dates. —

Section 2, ch. 50, SLA 2010, which enacted this article, makes this article effective September 5, 2010.

Sec. 45.45.450. Identification of cost recovery fees.

If a rental car business charges a cost recovery fee, the rental car business shall separately identify and charge for each cost recovery fee in writing in the rental car agreement. In this section, “cost recovery fee” means a vehicle licensing cost recovery fee, an airport-related cost, a government tax, or a government surcharge.

History. (§ 2 ch 50 SLA 2010)

Sec. 45.45.455. Vehicle licensing cost recovery fee.

  1. A rental car business may not charge a renter a vehicle licensing cost recovery fee unless the vehicle licensing cost recovery fee represents a good faith estimate by the rental car business of the average daily cost to the rental car business of recovering its actual total annual licensing costs in the state during a calendar year.
  2. If the total amount of the vehicle licensing cost recovery fees collected by a rental car business during a calendar year exceeds the actual amount of the rental car business’s licensing costs during that calendar year, the rental car business shall
    1. retain the excess amount; and
    2. adjust the good faith estimate required by (a) of this section for the next calendar year so that the good faith estimate reflects the excess amount.
  3. In addition to the adjustment required by (b) of this section, a rental car business may adjust its vehicle licensing cost recovery fee during the calendar year when the excess vehicle licensing cost recovery fees are collected if the vehicle licensing cost recovery fee otherwise complies with this section.

History. (§ 2 ch 50 SLA 2010)

Revisor’s notes. —

This section was enacted as AS 45.45.460; renumbered in 2010.

Sec. 45.45.459. Definitions.

In AS 45.45.450 45.45.459 ,

  1. “car” means a motor vehicle;
  2. “licensing cost” means the cost of titling, registering, obtaining license plates for, or inspection of the rental cars of a rental car business in the state;
  3. “motor vehicle” has the meaning given in AS 28.90.990 ;
  4. “rental car business” means a person who engages in the business of renting cars in the state;
  5. “vehicle licensing cost recovery fee” means a fee to recover licensing costs.

History. (§ 2 ch 50 SLA 2010)

Revisor’s notes. —

This section was enacted as AS 45.45.470; renumbered in 2010, at which time a conforming amendment was made in the section text.

Article 9. Copyright Royalties and Licensing.

Cross references. —

For severability of provisions of AS 45.45.500 45.45.590 , see § 3, ch. 50, SLA 1996 in the Temporary and Special Acts.

Sec. 45.45.500. Notice required before contract.

A copyright owner or a performing rights society may not enter into, or offer to enter into, a contract for the payment of royalties by a business proprietor unless at the time of the offer, or within 72 hours before entering into the contract, the copyright owner or performing rights society provides to the business proprietor a notice containing

  1. the rates and terms of the royalties under the contract, including any sliding scale, discounts, or reductions in rates on any basis, for which the business proprietor may be eligible, and any scheduled increases or decreases in rates during the term of the contract;
  2. in the case of a performing rights society, a toll free number from which the business proprietor may obtain answers to inquiries concerning musical works and copyright owners represented by the performing rights society; and
  3. in the case of a performing rights society, notice that the most recent available list of the members or affiliates represented by the performing rights society and the most recent available list of the copyrighted musical works in the performing rights society’s repertoire will be available on electronic media through the Cabaret Hotel and Restaurant Retail Association at the expense of the performing rights society.

History. (§ 1 ch 50 SLA 1996)

Editor’s notes. —

Section 2, ch. 50, SLA 1996 provides that AS 45.45.500 45.45.530 do not apply to “a contract entered into, issued, or renewed before July 1, 1996.”

Sec. 45.45.510. Minimum contents of royalties contracts.

  1. A royalties contract entered into, issued, or renewed in this state must be in writing and signed by the parties. The contract must include at least the
    1. business proprietor’s name and business address, and the name and location of each place of business of the business proprietor to which the contract applies;
    2. duration of the contract; and
    3. terms for the collection of the royalties and a rate schedule for the royalties, including any sliding scale, discount, or schedule for an increase or decrease of the rates during the term of the contract.
  2. A contract for the payment of royalties entered into, issued, or renewed in this state may not exceed one year at a time, unless the contract is under the terms of a national agreement. When each year of the contract ends, the contract is automatically renewed on the same terms and conditions unless either party to the contract provides the other party with written notice of the party’s desire to terminate the contract or to change the terms and conditions. The notice must be given at least 30 days before the termination of the current term.

History. (§ 1 ch 50 SLA 1996)

Editor’s notes. —

Section 2, ch. 50, SLA 1996 provides that AS 45.45.500 45.45.530 do not apply to “a contract entered into, issued, or renewed before July 1, 1996.”

Sec. 45.45.520. Collection of royalties.

A copyright owner, a performing rights society, or an agent or employee of a copyright owner or performing rights society may not collect or attempt to collect a payment or another fee under a royalties contract between the copyright owner or performing rights society and a business proprietor unless the contract complies with AS 45.45.500 45.45.590 .

History. (§ 1 ch 50 SLA 1996)

Editor’s notes. —

Section 2, ch. 50, SLA 1996 provides that AS 45.45.500 45.45.530 do not apply to “a contract entered into, issued, or renewed before July 1, 1996.”

Sec. 45.45.530. Prohibited practices.

  1. A performing rights society, or an agent or employee of a performing rights society, may not collect or attempt to collect a royalty payment or another fee from a business proprietor licensed by the performing rights society, unless the collection or collection attempt is made under a contract entered into in accordance with AS 45.45.500 45.45.590 .
  2. An agent or employee of a performing rights society may not enter a business proprietor’s premises to discuss a contract for the performance of copyrighted works or payment of royalties unless the agent or employee immediately discloses the purpose of the discussion and that the agent or employee is an agent or employee of a performing rights society.

History. (§ 1 ch 50 SLA 1996)

Editor’s notes. —

Section 2, ch. 50, SLA 1996 provides that AS 45.45.500 45.45.530 do not apply to “a contract entered into, issued, or renewed before July 1, 1996.”

Sec. 45.45.550. Private action.

A person who suffers a loss as a result of another person knowingly engaging in conduct that violates AS 45.45.500 45.45.590 may bring a civil action to recover actual damages and reasonable attorney fees, to enjoin the violation, and to seek any other remedy available at law or equity for the violation. In this section, “knowingly” has the meaning given in AS 11.81.900 .

History. (§ 1 ch 50 SLA 1996)

Sec. 45.45.560. Exemptions.

The provisions of AS 45.45.500 45.45.590 do not apply to

  1. a royalties contract between copyright owners, or performing rights societies, and
    1. broadcasters licensed by the Federal Communications Commission; or
    2. a cable television operator, a cable television programmer, or another transmission service;
  2. an investigation by a law enforcement agency or other persons concerning a suspected violation of AS 45.50.900(a)(2);
  3. contracts between copyright owners, or performing rights societies, and software publishers.

History. (§ 1 ch 50 SLA 1996)

Sec. 45.45.570. Construction.

AS 45.45.500 45.45.590 may not be construed to prevent a performing rights society from informing a business proprietor of the business proprietor’s obligations under 17 U.S.C. (federal copyright law) or from exercising any exclusive rights preempted under 17 U.S.C. 301(a).

History. (§ 1 ch 50 SLA 1996)

Sec. 45.45.590. Definitions.

In AS 45.45.500 45.45.590 ,

  1. “business proprietor” means a person who owns a place of business in which the public may assemble and in which copyrighted musical works may be performed, broadcasted, or otherwise transmitted; in this paragraph, “place of business” includes a store, professional office, sports facility, entertainment facility, restaurant, hotel, or an alcoholic beverage establishment licensed under AS 04.11;
  2. “copyright owner” means the owner of a copyright of a musical work if the copyright is recognized and enforceable under 17 U.S.C.; “copyright owner” does not include the owner of a copyright in all or part of a motion picture or an audiovisual work;
  3. “musical work” means a nondramatic musical or similar work;
  4. “performing rights society” means an association or corporation that licenses the public performance of musical works on behalf of copyright owners, and includes Broadcast Music, Inc., SESAC, Inc., and The American Society of Composers, Authors, and Publishers;
  5. “royalties” means the fees payable to a copyright owner or a performing rights society for the public performance of a musical work;
  6. “royalties contract” means a contract for the payment of royalties.

History. (§ 1 ch 50 SLA 1996)

Article 10. Warranties For Assistive Technology Devices and Mobility Aids.

Editor’s notes. —

Section 4, ch. 102, SLA 1998 provides that nothing in AS 45.45.600 45.45.690 “modifies or terminates a contract in effect on September 14, 1998.” Section 5, ch. 102, SLA 1998 provides that AS 45.45.600 45.45.690 apply “to sales and leases of assistive technology devices or mobility aids entered into on or after September 14, 1998.”

Sec. 45.45.600. Express warranty required.

A manufacturer who sells an assistive technology device or a mobility aid to a consumer, either directly or through a dealer, shall furnish the consumer with an express warranty stating that the assistive technology device or mobility aid is free from any nonconformity. The duration of the express warranty shall be not less than one year after first delivery of the assistive technology device or mobility aid to a consumer. If a manufacturer fails to furnish an express warranty as required by this section, the assistive technology device or mobility aid shall be covered by the express warranty as if the manufacturer had furnished an express warranty to the consumer as required by this section.

History. (§ 1 ch 102 SLA 1998)

Sec. 45.45.610. Repairs of nonconformities.

If a new assistive technology device or mobility aid does not conform to an applicable express warranty and the consumer reports the nonconformity to the manufacturer, the lessor, or any of the manufacturer’s authorized dealers and makes the assistive technology device or mobility aid available for repair before one year after first delivery of the assistive technology device or mobility aid to a consumer, the nonconformity shall be repaired and the manufacturer shall pay collateral costs incurred by the consumer.

History. (§ 1 ch 102 SLA 1998)

Sec. 45.45.620. Returns of nonrepairable goods; refunds.

If, after a reasonable attempt to repair, the nonconformity reported under AS 45.45.610 is not repaired, the manufacturer shall

  1. at the direction of a consumer who has not leased the assistive technology device or the mobility aid from a dealer, do one of the following:
    1. accept return of the assistive technology device or mobility aid and replace the assistive technology device or mobility aid with a comparable new assistive technology device or mobility aid and, within 30 days, refund any collateral costs;
    2. accept return of the assistive technology device or mobility aid and, within 30 days, refund to the consumer and to a holder of a perfected security interest in the consumer’s assistive technology device or mobility aid, as their interest may appear, the full purchase price plus any finance charge, amount paid by the consumer at the point of sale, and collateral costs, less a reasonable allowance for use; a reasonable allowance for use may not exceed the amount obtained by multiplying the full purchase price of the assistive technology device or mobility aid by a fraction, the denominator of which is 1,825 and the numerator of which is the number of days that the assistive technology device or mobility aid was used before the consumer first reported the nonconformity to the dealer;
  2. with respect to a consumer who has leased the assistive technology device or mobility aid from a dealer, accept return of the assistive technology device or mobility aid, refund to the lessor and to a holder of a perfected security interest in the assistive technology device or mobility aid, as their interest may appear, the current value of the written lease, and refund to the consumer the amount that the consumer paid under the written lease plus any collateral costs, less a reasonable allowance for use; in this paragraph,
    1. the current value of the written lease equals the total amount for which that lease obligates the consumer during the period of the lease remaining after its early termination, plus the dealer’s early termination costs and the value of the assistive technology device or mobility aid at the lease expiration date if the lease sets out that value, less the lessor’s early termination savings;
    2. a reasonable allowance for use may not exceed the amount obtained by multiplying the total amount for which the written lease obligates the consumer by a fraction, the denominator of which is 1,825 and the numerator of which is the number of days that the consumer used the assistive technology device or mobility aid before first reporting the nonconformity to the manufacturer, lessor, or dealer.

History. (§ 1 ch 102 SLA 1998)

Sec. 45.45.630. Procedures for returns and refunds.

  1. To receive a comparable new assistive technology device or mobility aid or a refund under AS 45.45.620 (1), a consumer shall offer to transfer possession of the assistive technology device or mobility aid having the nonconformity to its manufacturer. No later than 30 days after that offer, the manufacturer shall provide the consumer with the comparable new assistive technology device or mobility aid or with a refund. When the manufacturer provides the new assistive technology device or mobility aid or refund, the consumer shall return the assistive technology device or mobility aid having the nonconformity to the manufacturer, along with any endorsements necessary to transfer real possession to the manufacturer.
  2. To receive a refund under AS 45.45.620 (2), a consumer shall offer to return the assistive technology device or mobility aid having the nonconformity to its manufacturer. No later than 30 days after that offer, the manufacturer shall provide the refund to the consumer. When the manufacturer provides the refund, the consumer shall return to the manufacturer the assistive technology device or mobility aid having the nonconformity.
  3. To receive a refund under AS 45.45.620 (2), a lessor shall offer to transfer possession of the assistive technology device or mobility aid having the nonconformity to its manufacturer. No later than 30 days after that offer, the manufacturer shall provide the refund to the lessor. When the manufacturer provides the refund, the lessor shall provide to the manufacturer any endorsements necessary to transfer legal possession to the manufacturer.

History. (§ 1 ch 102 SLA 1998)

Sec. 45.45.640. Lease unenforceable after refund.

A person may not enforce the lease for an assistive technology device or a mobility aid against the consumer after the consumer receives a refund under AS 45.45.600 45.45.690 .

History. (§ 1 ch 102 SLA 1998)

Sec. 45.45.650. Limits on sale or lease of returned equipment.

An assistive technology device or mobility aid returned by a consumer or a lessor in this state under AS 45.45.600 45.45.690 , or by a consumer or lessor in another state under a similar law of that state, may not be sold or leased again in this state unless full disclosure of the reasons for return is made to any prospective buyer or lessee.

History. (§ 1 ch 102 SLA 1998)

Sec. 45.45.660. Rights may not be waived.

A waiver by a consumer of rights under AS 45.45.600 45.45.690 is void.

History. (§ 1 ch 102 SLA 1998)

Sec. 45.45.670. No limitation of other rights.

AS 45.45.600 45.45.690 do not limit rights or remedies available to a consumer under any other law.

History. (§ 1 ch 102 SLA 1998)

Sec. 45.45.680. Action for damages authorized.

In addition to pursuing another remedy, a consumer may bring an action to recover for damages caused by a violation of AS 45.45.600 45.45.690 . The court shall award a consumer who prevails in an action under this section twice the amount of any pecuniary loss, together with costs, disbursements, and reasonable attorney fees, and any equitable relief that the court determines is appropriate.

History. (§ 1 ch 102 SLA 1998)

Sec. 45.45.690. Definitions.

In AS 45.45.600 45.45.690 ,

  1. “assistive technology device” means an item, piece of equipment, or product system, whether acquired commercially off the shelf, modified, or customized, that is used or designed to be used to increase, maintain, or improve a functional capability of an individual with disabilities; an assistive technology device system that, as a whole, is within the definition of “assistive technology device,” is itself an assistive technology device, and in such case the term also applies to each component product of the assistive technology device system that is itself ordinarily an assistive technology device; to the extent that a device otherwise meets the requirements of this paragraph, “assistive technology device” includes
    1. wheelchairs and scooters of any kind, and other aids that enhance the mobility or positioning of an individual, such as motorization, motorized positioning features, and the switches and controls for motorized features;
    2. hearing aids, telephone communication devices for the deaf, and other assistive listening devices;
    3. computer equipment and reading devices with voice output, optical scanners, talking software, braille printers, and other aids and devices that provide access to text;
    4. computer equipment with voice output, artificial larynges, voice amplification devices, and other alternative and augmentative communication devices;
    5. voice recognition computer equipment, software and hardware accommodations, switches, and other forms of alternative access to computers;
    6. environmental control units; and
    7. simple mechanical aids that enhance the functional capabilities of an individual with disabilities;
  2. “assistive technology device system” means the final product resulting from a manufacturer customizing, adapting, reconfiguring, refitting, refurbishing, or composing into a system one or more component products, whether or not new, that may be assistive technology devices or standard products of the same or other manufacturer;
  3. “collateral costs” means the following expenses incurred by a consumer:
    1. medical expenses for the treatment of a physical injury caused by a nonconformity in an assistive technology device or mobility aid;
    2. the cost to rent a substitute assistive technology device or mobility aid during the time repairs are attempted for an assistive technology device or mobility aid that has a nonconformity and during the time preceding receipt of a replacement when repairs have been unsuccessful;
    3. the cost of shipping an assistive technology device or mobility aid that has a nonconformity to a manufacturer, lessor, or authorized dealer for repair or replacement; and
    4. the documented costs of long-distance telephone calls and facsimile transmissions used to contact the manufacturer, lessor, or authorized dealer for the purpose of effecting a repair or replacement of an assistive technology device or mobility aid that has a nonconformity;
  4. “consumer” means
    1. the purchaser of an assistive technology device or mobility aid, if the assistive technology device or mobility aid was purchased from a dealer or manufacturer for purposes other than resale;
    2. a person to whom the assistive technology device or mobility aid is transferred for purposes other than resale, if the transfer occurs before the expiration of an express warranty applicable to the assistive technology device or mobility aid;
    3. a person who may enforce the warranty; or
    4. a person who leases an assistive technology device or a mobility aid from a lessor under a written lease;
  5. “dealer” means a person who is in the business of selling assistive technology devices or mobility aids without assembly or modification;
  6. “demonstrator” means an assistive technology device or a mobility aid used primarily for the purpose of demonstration to the public;
  7. “early termination cost” means any expense or obligation that a lessor incurs as a result of both the termination of a written lease before the termination date set out in that lease and the return of an assistive technology device or mobility aid to a manufacturer; “early termination cost” includes a penalty for prepayment under a finance arrangement;
  8. “early termination savings” means any expense or obligation that a lessor avoids as a result of both the termination of a written lease before the termination date set out in that lease and the return of an assistive technology device or mobility aid to a manufacturer; “early termination savings” includes an interest charge that the lessor would have paid to finance the assistive technology device or mobility aid or, if the lessor does not finance the assistive technology device or mobility aid, the difference between the total amount for which the lease obligates the consumer during the period of the lease term remaining after the early termination and the present value of that amount at the date of the early termination;
  9. “lessor” means a person who leases an assistive technology device or mobility aid to a consumer, or who holds the lessor’s rights, under a written lease;
  10. “manufacturer” means a person who is in the business of manufacturing, modifying, or assembling assistive technology devices or mobility aids and agents of that person, including an importer, a distributor, factory branch, distributor branch, and any warrantors of the manufacturer’s assistive technology devices or mobility aids, but does not include a dealer;
  11. “mobility aid” means equipment or a device, including a demonstrator, designed to assist the mobility of a physically disabled person, that a consumer purchases or accepts transfer of in this state; in this paragraph, “device” includes
    1. a motorized or nonmotorized wheelchair;
    2. a scooter;
    3. an automotive crane;
    4. a van lift; and
    5. special hand controls for a motor vehicle;
  12. “nonconformity” means a condition or defect that substantially impairs the use, value, or safety of an assistive technology device or mobility aid or a component of the assistive technology device or mobility aid, but does not include a condition or defect that is the result of abuse, neglect, or unauthorized modification or alteration of the assistive technology device or mobility aid or a component of the assistive technology device or mobility aid by a consumer;
  13. “reasonable attempt to repair” means either of the following occurring within the term of an express warranty applicable to a new assistive technology device or mobility aid or within one year after first delivery of the assistive technology device or mobility aid to a consumer, whichever is sooner:
    1. the same nonconformity with the warranty is subject to repair by the manufacturer, lessor, or any of the manufacturer’s authorized dealers at least four times and the nonconformity continues;
    2. the assistive technology device or mobility aid is out of service for an aggregate of at least 30 days because of warranty nonconformities.

History. (§ 1 ch 102 SLA 1998)

Article 11. Distributorships.

Editor’s notes. —

Section 2, ch. 15, SLA 2002 provides that AS 45.45.700 45.45.790 apply “to a distributorship agreement that is entered into on or after August 1, 2002.”

Sec. 45.45.700. Coercion of dealer.

  1. A distributor may not coerce or attempt to coerce a dealer to perform certain acts by using duress or by threatening to terminate the distributorship agreement or another agreement between the distributor and the dealer.
  2. In this section, “certain acts” means
    1. the purchase or acceptance of delivery of merchandise that has not been ordered by the dealer;
    2. the assignment, sale, or disposal of a contract or property; or
    3. making an expenditure that the dealer has not contracted to make.

History. (§ 1 ch 15 SLA 2002)

Sec. 45.45.710. Disposition of merchandise remaining upon contract termination.

  1. If a dealer maintains a stock of merchandise supplied for the dealer’s resale under a distributorship agreement and if the distributor or the dealer terminates the distributorship agreement, the distributor shall, unless the dealer chooses to keep the merchandise, pay the dealer for the merchandise that was purchased from the distributor and that is held by the dealer on the date of the termination an amount equal to
    1. the fair market value for merchandise that is unused and for which the retailer has paid the distributor, plus 100 percent of the transportation charges paid by the dealer to return the merchandise to the distributor; in this paragraph,
      1. “fair market value” means the amount the distributor would realize from the sale of the merchandise to another retailer using reasonable good faith efforts;
      2. “unused” means unopened merchandise that is still in the original factory packaging or container;
    2. 85 percent of the current net price, as listed in the current price list or catalog of the distributor, for repair parts, including superseded parts; and
    3. five percent of the current net price of repair parts to cover the handling, packing, and transportation of the repair parts back to the distributor.
  2. Upon payment of the amounts required by (a) of this section, the title to the merchandise passes to the distributor making the payment, and the distributor is entitled to the possession of the merchandise for which the payment was made.
  3. In (a) of this section, if a repair part is not listed in a current price list or catalog of the distributor, the current net price is the higher of the fair market value or the latest price published by the distributor for the repair part if a dealer has actual proof of the purchase of the repair part from the distributor and if the repair part was purchased within 10 years before the termination.

History. (§ 1 ch 15 SLA 2002)

Sec. 45.45.720. Time for payment.

A distributor shall make the payments to the dealer under AS 45.45.710 not later than three months after the date the agreement is terminated. When the payment is made, the distributor shall provide the dealer with a final detailed statement of account for the merchandise.

History. (§ 1 ch 15 SLA 2002)

Sec. 45.45.730. Death or disability of dealer or holder of majority interest in dealer.

Unless the distributorship agreement is continued by the personal representative, an heir, a devisee, or another successor in interest of the individual, upon the death or disability of an individual who is a dealer or holds a majority interest in a dealer, a distributor who supplied merchandise to the dealer shall repurchase from the personal representative, heir, devisee, or other successor in interest the merchandise that was purchased from the distributor and that remains when the distributorship agreement is terminated under this section. To repurchase under this section, the distributor shall pay an amount equal to the amount identified under AS 45.45.710(a) and (c), and the repurchase is subject to AS 45.45.720 . In this section, “devisee,” “heir,” and “personal representative” have the meanings given in AS 13.06.050 .

History. (§ 1 ch 15 SLA 2002)

Sec. 45.45.740. Required purchase, reimbursement, and supplies.

  1. In addition to any purchase of merchandise required by AS 45.45.710 , if a distributor terminates a distributorship agreement or makes substantial changes in the competitive situation of the distributor’s dealer with regard to distribution of the merchandise or services that are the subject of the distribution agreement, the distributor shall
    1. purchase that portion of the dealer’s business directly affected by the distributorship agreement or the change, including assets and machinery, at commercially reasonable business valuations; and
    2. reimburse the dealer for the expenses that were necessarily incurred by the dealer
      1. for that portion of the dealer’s business covered by the distributorship agreement; and
      2. during the 12 months before the termination or change.
  2. In this section, “change” does not include making a price change that affects similarly situated dealers equally.

History. (§ 1 ch 15 SLA 2002)

Sec. 45.45.750. Prohibited terms.

  1. A distributor may not require a dealer to agree to any of the following terms in a distributorship agreement, or in another agreement that is ancillary to a distributorship agreement, as a condition of an offer, grant, or renewal of a distributorship agreement or ancillary agreement:
    1. a requirement that the dealer waive a trial by jury in court cases involving the distributor;
    2. a requirement that disputes between the distributor and the dealer be submitted to arbitration or to any other binding alternate dispute resolution procedure, except authorization for the submission of a dispute to arbitration or to binding alternative dispute resolution if the distributor and dealer voluntarily agree to submit the dispute to arbitration or binding alternative dispute resolution when the dispute arises;
    3. a requirement that the dealer pay the attorney fees of the distributor;
    4. a requirement that prohibits a firearms dealer from selling firearms or related accessories, the sale of which is otherwise legal, but which the firearms distributor does not manufacture or distribute; or
    5. a requirement that the agreement be subject to the laws of a state other than Alaska.
  2. The provisions of (a) of this section do not apply to an agreement where a lease or sale of real property is the main purpose of the agreement.

History. (§ 1 ch 15 SLA 2002)

Sec. 45.45.760. Civil action.

  1. A dealer may bring an action in court against a distributor if the distributor engages in activity prohibited under AS 45.45.700 45.45.790 .
  2. In an action brought under (a) of this section, the dealer may obtain one or more of the following types of relief that apply to the specific action of the dealer:
    1. damages suffered by the dealer as a result of the activity;
    2. an injunction enjoining the distributor from engaging in the activity;
    3. a requirement that the distributor make a payment or a purchase required by AS 45.45.700 45.45.790 ;
    4. any other relief determined by the court to be appropriate under the circumstances.
  3. In this section, “activity prohibited under AS 45.45.700 45.45.790 ” means
    1. coercion or attempted coercion under AS 45.45.700 ;
    2. terminating a distributorship agreement without paying the dealer as required by AS 45.45.710 ;
    3. failing to pay the dealer within the time established by AS 45.45.720 ;
    4. failing to provide the statement of account as required by AS 45.45.720 ;
    5. failing to make a repurchase payment required by AS 45.45.730 ;
    6. failing to make a purchase as required by AS 45.45.740(a)(1) ;
    7. failing to make the reimbursement required by AS 45.45.740(a)(2) ; or
    8. violating AS 45.45.750 .

History. (§ 1 ch 15 SLA 2002)

Revisor’s notes. —

In 2002, “AS 45.45.700 45.45.790 ” was substituted for “this chapter” in subsections (a), (b), and (c), to correct a manifest error in ch. 15, SLA 2002.

Sec. 45.45.770. Exemptions.

  1. AS 45.45.700 45.45.790 do not apply to
    1. a distributorship agreement that would be considered a franchise regulated by 15 U.S.C. 2801 — 2841 (Petroleum Marketing Practices Act);
    2. a situation regulated by AS 45.50.800 45.50.850 ;
    3. a distributorship agreement, including a franchise agreement, for the sale, repair, or servicing of motor vehicles that are required to be registered under AS 28.10;
    4. an activity or agreement by a person licensed under AS 04 if the activity or agreement is within the scope of the license or is incidental to the activity or agreement that is within the scope of the license;
    5. a distributorship agreement or another contract between a person licensed under AS 04 and a distributor, manufacturer, importer, supplier, or wholesaler of alcoholic beverages who is not located in this state if the subject of the agreement or contract is the distribution of alcoholic beverages to the licensed person by the distributor, manufacturer, importer, supplier, or wholesaler;
    6. a distributor, manufacturer, importer, supplier, or wholesaler of alcoholic beverages;
    7. a distributorship agreement for the sale or distribution of, or other transaction involving, cigarettes, food, drink, or a component of food or drink; in this paragraph, “cigarette” has the meaning given in AS 43.50.170 ;
    8. a manufacturer with 50 or fewer employees; or
    9. a marine product or motorized recreational product agreement under AS 45.27.
  2. In (a) of this section, “alcoholic beverage” has the meaning given in AS 04.21.080 .

History. (§ 1 ch 15 SLA 2002; am § 3 ch 28 SLA 2009)

Effect of amendments. —

The 2009 amendment, effective May 26, 2009, added (a)(9), and made a related stylistic change.

Sec. 45.45.790. Definitions.

In AS 45.45.700 45.45.790 ,

  1. “dealer” means a person who enters into a distributorship agreement and who, under the agreement, receives merchandise or services from a distributor;
  2. “distributor” means a person who enters into a distributorship agreement and who, under the agreement, provides merchandise or services to a dealer; the term includes
    1. a wholesaler;
    2. a manufacturer;
    3. a person that is a parent corporation or an affiliated corporation of a person identified in (A) or (B) of this paragraph; and
    4. a field representative, an officer, an agent, or another direct or indirect representative of a person identified in (A), (B), or (C) of this paragraph;
  3. “distributorship agreement” means an agreement, whether express, implied, oral, or written, between two or more persons
    1. by which a person receives the right to
      1. sell or lease merchandise or services at retail or wholesale; or
      2. use a trade name, trademark, service mark, logotype, advertising, or other commercial symbol; and
    2. in which the parties to the agreement have a joint interest, whether equal or unequal, in the offering, selling, or leasing of the merchandise or services;
  4. “merchandise” includes parts and accessories;
  5. “terminate” includes failing to renew.

History. (§ 1 ch 15 SLA 2002)

Article 12. Deceptive Acts or Practices Relating to Spyware.

Sec. 45.45.792. Prohibited conduct relating to spyware.

  1. It is unlawful for a person who is not the owner or authorized user of a computer to engage in deceptive acts or practices described in this subsection using spyware. Deceptive acts or practices under this subsection are
    1. causing a pop-up advertisement to be shown on the computer screen of a user by means of a spyware program, knowing that the pop-up advertisement is
      1. displayed in response to a user accessing a specific
        1. mark; or
        2. Internet website address; and
      2. purchased or acquired by a person other than
        1. the mark owner;
        2. a licensee of the mark;
        3. an authorized agent of the owner of the mark;
        4. an authorized user of the mark; or
        5. a person advertising the lawful sale, lease, or transfer of products bearing the mark through a secondary marketplace for the sale of goods or services; and
    2. purchasing advertising that violates (1) of this subsection if the purchaser of the advertising
      1. receives notice of the violation from the mark owner; and
      2. fails to stop the violation.
  2. It is not a violation of this section for a person to display a pop-up advertisement under (a)(1) of this section if the spyware program includes a function that
    1. requests information about the user’s state of residence before displaying a pop-up advertisement to the user, and the user indicates a residence outside this state;
    2. implements a reasonably reliable automated system to determine the user’s likely geographic location, according to current best practices in the field, and the system determines that it is unlikely that the user is located in this state; and
    3. does not prompt, ask, or otherwise encourage a user to indicate a residence outside this state.
  3. It is not a violation of (a)(2) of this section if a person purchases advertising that complies with the requirements of (b) of this section.

History. (§ 3 ch 97 SLA 2005)

Sec. 45.45.794. Removal of potentially harmful software.

Notwithstanding AS 45.45.792 , a provider of computer software or an interactive computer service may, after notice to a customer, remove from or disable a program on the customer’s computer that is used to

  1. violate AS 45.45.792 ; or
  2. collect information from the computer of the customer without the customer’s knowledge.

History. (§ 3 ch 97 SLA 2005)

Sec. 45.45.798. Definitions.

In AS 45.45.792 45.45.798 ,

  1. “interactive computer service” means an information service, system, or access software provider that provides or enables computer access by multiple users to a computer server; “interactive computer service” includes an Internet or online service provider or a service or system providing access to the Internet, including a system operated by a library or educational institution;
  2. “Internet” means the combination of computer systems or networks that make up the international network for interactive communications services, including remote logins, file transfer, electronic mail, and newsgroups;
  3. “Internet or online service provider” means an interactive computer service that provides software or other material that enables a person to transmit, receive, display, forward, cache, search, subset, organize, reorganize, or translate content; select or analyze content; or allow or disallow content;
  4. “mark” means a registered trademark, registered service mark, or registered domain name in an Internet website address that is owned, licensed, or lawfully used by a person doing business in this state;
  5. “pop-up advertisement” means material offering for sale or advertising the availability or quality of a property, good, or service that is displayed on a user’s computer screen, without any request or consent of the user, separate from an Internet website that a user intentionally accesses;
  6. “spyware”
    1. means software on the computer of a user who resides in the state that
      1. collects information about an Internet website at the time the Internet website is being viewed in the state, unless the Internet website is the Internet website of the person who provides the software; and
      2. uses the information collected contemporaneously to display a pop-up advertisement on the computer;
    2. does not mean
      1. an Internet website;
      2. a service operated by an Internet or online service provider accessed by a user;
      3. software designed and installed primarily to prevent, diagnose, detect, or resolve technical difficulties or prevent fraudulent activities;
      4. software designed and installed to protect the security of the user’s computer from unauthorized access or alteration;
      5. software or data that reports information to an Internet website previously stored by the Internet website on the user’s computer, including a cookie; in this sub-subparagraph, “cookie” means a text file that is placed on a computer to record information that can be read or recognized when the user of the computer later accesses a particular Internet website, online location, or online service by an interactive computer service, Internet website, or a third party acting on behalf of an interactive computer service or an Internet website;
      6. software that provides the user with the capability to search the Internet;
      7. software installed on the user’s computer with the consent of the user the primary purpose of which is to prevent access to certain Internet content;
  7. “user” means the owner or authorized user of a computer.

History. (§ 3 ch 97 SLA 2005)

Article 13. Miscellaneous Provisions.

Sec. 45.45.900. Indemnification agreements against public policy.

A provision, clause, covenant, or agreement contained in, collateral to, or affecting a construction contract that purports to indemnify the promisee against liability for damages for (1) death or bodily injury to persons, (2) injury to property, (3) design defects, or (4) other loss, damage or expense arising under (1), (2), or (3) of this section from the sole negligence or wilful misconduct of the promisee or the promisee’s agents, servants, or independent contractors who are directly responsible to the promisee, is against public policy and is void and unenforceable; however, this provision does not affect the validity of an insurance contract, workers’ compensation, or agreement issued by an insurer subject to the provisions of AS 21, or a provision, clause, covenant, or agreement of indemnification respecting the handling, containment, or cleanup of oil or hazardous substances as defined in AS 46.

History. (§ 1 ch 155 SLA 1975; am § 6 ch 59 SLA 1986)

Revisor’s notes. —

Formerly AS 45.47.010. Renumbered in 1980.

Opinions of attorney general. —

The apparent prohibition on indemnification agreements in construction contracts found in this section will only apply when the promissee is completely negligent and seeks to hold an innocent promisor accountable. February 27, 1986 Op. Att’y Gen.

Notes to Decisions

Legislative intent. —

The absence in this section of an exemption for limitation of liability clauses indicates that the legislature did not intend to allow an exemption. City of Dillingham v. CH2M Hill Northwest, Inc., 873 P.2d 1271 (Alaska 1994).

The word “indemnify” as used in this section means “exempt,” and thus this section prohibits limitation of liability clauses; absent legislative action to the contrary, such an interpretation best fulfills the legislature’s express intent to prevent a party to a construction contract from bargaining away liability for the party’s negligent acts. City of Dillingham v. CH2M Hill Northwest, Inc., 873 P.2d 1271 (Alaska 1994).

Applicability of section. —

This section became effective on September 23, 1975, and governs contracts executed on or after that date. Contracts executed before that date are governed by the rule announced in Burgess Constr. Co. v. State, 614 P.2d 1380 (Alaska 1980), that an indemnity clause is effective to shift responsibility for an accident where the indemnitee is negligent and the indemnitor is not. Stephan & Sons v. Municipality of Anchorage, 629 P.2d 71 (Alaska 1981).

There is no indication in the text of this section itself that would indicate that the statute is intended to ban only indemnification clauses that would benefit a public promisee at the expense of a private promisor. City of Dillingham v. CH2M Hill Northwest, Inc., 873 P.2d 1271 (Alaska 1994).

This section applies to a clause that is questioned under this statute regardless of whether indemnification has been sought. City of Dillingham v. CH2M Hill Northwest, Inc., 873 P.2d 1271 (Alaska 1994).

Section applicable to equipment leases. —

This section should be applied to void indemnity clauses in equipment lease agreements if such a legal rule would advance the purposes of the anti-indemnity statute by inducing careful inspection and use of the leased equipment. Aetna Cas. & Sur. Co. v. Marion Equip. Co., 894 P.2d 664 (Alaska 1995).

When state is solely negligent. —

This section should come into effect only when it is determined, as between the state and contractors, that the state is solely negligent. Rogers & Babler v. State, 713 P.2d 795 (Alaska 1986).

“Wilful misconduct” does not require intent to harm. —

Wilful misconduct means volitional action taken either with a knowledge that serious injury to another will possibly result, or with wanton and reckless disregard of the possible results. Aetna Cas. & Sur. Co. v. Marion Equip. Co., 894 P.2d 664 (Alaska 1995).

Because the insured was found by a jury to have acted with reckless disregard of the plaintiff’s interests and safety, the insured’s injurious behavior is properly termed wilful misconduct. Consequently, this section forbids the indemnity the insurer seeks. Aetna Cas. & Sur. Co. v. Marion Equip. Co., 894 P.2d 664 (Alaska 1995).

Indemnity clause not invalidated. —

Indemnity agreements between a hospital and a general contractor, and between the general contractor and a subcontractor did not violate this section because neither indemnity agreement purported to indemnify any of the parties against liability for death or injury due to the sole negligence or wilful misconduct of the promises. Hoffman Constr. Co. v. U.S. Fabrication & Erection, Inc., 32 P.3d 346 (Alaska 2001).

Cited in

Deaver v. Auction Block Co., 107 P.3d 884 (Alaska 2005).

Sec. 45.45.905. Transportation services contracts; indemnification agreements prohibited.

  1. A motor carrier and a shipping person may not, with regard to a transportation services contract, agree that
    1. the motor carrier will indemnify, defend, or hold the shipping person harmless, or agree to a provision that has the effect of indemnifying, defending, or holding a shipping person harmless, from claims or liability for the negligence, intentional acts, or intentional omissions of the shipping person; or
    2. the shipping person will indemnify, defend, or hold the motor carrier harmless, or agree to a provision that has the effect of indemnifying, defending, or holding a motor carrier harmless, from claims or liability for the negligence, intentional acts, or intentional omissions of the motor carrier.
  2. An agreement that violates (a) of this section is against public policy and is void and unenforceable.
  3. This section does not apply to the Uniform Intermodal Interchange and Facilities Access Agreement administered by the Intermodal Association of North America or to another agreement that provides for the interchange, use, or possession of intermodal chassis, intermodal containers, or other intermodal equipment.
  4. In this section,
    1. “motor carrier” means a person who is engaged in the transportation of property for compensation by motor vehicle, and includes an agent, employee, servant, or independent contractor of the motor carrier if the agent, employee, servant, or independent contractor provides services in connection with the particular transportation services contract to which (a) of this section is being applied;
    2. “motor vehicle” has the meaning given in AS 28.90.990 , except that the motor vehicle must have a gross weight rating or gross combination weight rating that is greater than 10,000 pounds;
    3. “shipping person” means a person who enters into a transportation services contract to use the services of a motor carrier, and includes an agent, employee, servant, or independent contractor of the shipping person if the agent, employee, servant, or independent contractor provides services in connection with the particular transportation services contract to which (a) of this section is being applied;
    4. “transportation services” means
      1. the transportation of property;
      2. entry on property to load, unload, or transport property; or
      3. providing a service, including the packing or storage of property, incidental to (A) or (B) of this paragraph.

History. (§ 1 ch 21 SLA 2010)

Effective dates. —

Section 1, ch. 21, SLA 2010, which enacted this section, is effective August 25, 2010.

Editor’s notes. —

Under § 2, ch. 21, SLA 2010, this section “does not apply to an agreement to indemnify, defend, or hold a shipping person or a motor carrier harmless unless the agreement is entered into on or after August 25, 2010.”

Sec. 45.45.910. Sale or transfer of consumer electrical products.

  1. Unless exempted by the department under (d) of this section, a person may not sell, offer to sell, or otherwise transfer in the course of the person’s business a consumer electrical product that is manufactured after August 14, 1990, unless the product is clearly marked as being listed by an approved third-party certification program.
  2. A person may not sell, offer to sell, or otherwise transfer in the course of the person’s business a consumer electrical product that is manufactured before August 14, 1990, unless the product is clearly marked
    1. as being listed by an approved third-party certification program; or
    2. with a warning label that complies with (e) of this section.
  3. A person may not sell, offer to sell, or otherwise transfer in the course of the person’s business a consumer electrical product that has been exempted under (d) of this section, unless the product is clearly marked with a warning label that complies with (e) of this section.
  4. If a consumer electrical product is a work of art or an item that has an unusual application that makes approval by a third-party certification program not reasonably available, the department shall upon request exempt the item from (a) of this section.  The department shall establish by regulation guidelines to identify consumer electrical products that qualify for an exemption under this section.
  5. The warning label required by this section must be a brightly colored label that contains in simple, direct language a warning that the electrical product is not listed by an approved third-party certification program.  The department shall adopt regulations establishing the exact content, color, design, and use of the warning label.
  6. Unless a later version has been adopted by the department by regulation, a certification program must meet the requirements of ANSI Z-34.1 — 1987, American National Standards for Certification — Third-Party Certification Program, published by the American National Standards Institute, in order to qualify as an approved third-party certification program under this section.  The department may adopt by regulation later versions of the American National Standards for Certification — Third-Party Certification Program, as the standard for third-party certification programs under this section.  If the department has adopted a later version, a certification program must meet the requirements of the most recent version adopted by the department in order to qualify as an approved third-party certification program under this section.
  7. In this section,
    1. “approved third-party certification program” means a program that qualifies under (f) of this section;
    2. “consumer electrical product” means an electrical product that is marketed for and commonly purchased by the general public and that is
      1. an assembled device that has an electrical circuit that operates at 110 volts AC or higher, except for mechanical attachments, including pump heads, pulleys, and fan blades, that are used in the application of the device;
      2. a device that when assembled has an electrical circuit that operates at 110 volts AC or higher; or
      3. an individual component part that is intended to be part of an electrical circuit that operates at 110 volts AC or higher;
    3. “department” means the Department of Labor and Workforce Development.

History. (§ 1 ch 59 SLA 1990)

Revisor’s notes. —

In 1999, in (g) of this section, “Department of Labor” was changed to “Department of Labor and Workforce Development” in accordance with § 90, ch. 58, SLA 1999.

Cross references. —

For violation of (a), (b), or (c) of this section as an unlawful trade practice, see AS 45.50.471(b) .

Administrative Code. —

For electrical safety code, see 8 AAC 70.

Sec. 45.45.920. Free trial period.

  1. Notwithstanding a provision in AS 45.02 to the contrary, a seller may not offer, promote, advertise, or provide a consumer with goods or services for a free trial period unless the seller complies with all the conditions of this section.
  2. When offering, promoting, or advertising consumer goods or services for a free trial period, a seller shall clearly and conspicuously disclose all material terms and conditions of the free trial period, including
    1. all material restrictions, limitations, terms, and conditions of the free trial period, including any obligation by the consumer to purchase a minimum quantity of goods or services after the free trial period ends;
    2. a description of all charges that will be imposed after the free trial period ends, including whether billing will include charges for shipping and handling and, if the offer, promotion, or advertising is made by telephone, the amount of the shipping and handling charges;
    3. a description of the consumer’s right to cancel; and
    4. any other obligations the consumer assumes by accepting or using the goods or services during the free trial period.
  3. Before providing goods or services to a consumer for a free trial period, a seller shall obtain express verifiable consent from the consumer to the free trial period.
  4. A consumer who receives goods or services for a free trial period may
    1. at any time during the free trial period, return the goods or cancel the services without further obligation to the seller;
    2. within 30 days after the free trial period ends, return the goods or cancel the services for a full refund of the charges, if any, or a partial refund for the unused portion of the goods or services.
  5. This section does not apply to a seller who provides goods or services to a consumer for free if the consumer does not assume any obligation by accepting the free goods or services.
  6. This section does not apply to
    1. a telephonic seller who is registered under AS 45.63 and who complies with AS 45.63; or
    2. a prenotification negative option plan that is regulated by 16 C.F.R. Part 425 and that complies with 16 C.F.R. Part 425.
  7. In this section, “seller” means a person who engages in the business of selling, contracting for the sale of, arranging for the sale of, or arranging for a free trial period for goods or services.

History. (§ 1 ch 57 SLA 2004; am § 45 ch 22 SLA 2015)

Cross references. —

For violation of this section as an unlawful trade practice, see AS 45.50.471(b) .

Effect of amendments. —

The 2015 amendment, effective July 1, 2015, in (f)(2), twice substituted “16 C.F.R. Part 425” for “16 C.F.R. 425”.

Sec. 45.45.930. Opt-out marketing plans.

  1. Notwithstanding a provision in AS 45.02 to the contrary, a seller may not use an opt-out marketing plan to sell goods or services unless the seller complies with all of the provisions of this section.
  2. Before using an opt-out marketing plan, a seller shall obtain express verifiable consent from the buyer that confirms that the buyer agrees to the use of the plan. The seller shall provide the following information before obtaining the consent:
    1. a description of the material terms and conditions of the plan, including a description of the goods or services that will be offered;
    2. that the buyer’s account will be charged unless the buyer takes an affirmative action to avoid the charge;
    3. the date the charge will be submitted for payment; and
    4. the specific steps the buyer must take to avoid the charge.
  3. A seller who charges a buyer for goods or services under an opt-out marketing plan has the burden of proving that the buyer provided the express verifiable consent required by (b) of this section and was given the disclosures required by (b) of this section.
  4. This section does not apply to a telephonic seller who is registered under AS 45.63 and who complies with AS 45.63.
  5. In this section,
    1. “opt-out marketing plan”
      1. means an arrangement under which a seller provides, without the buyer’s express verifiable consent, a notice to a buyer that identifies goods or services that the seller intends to provide to the buyer and to charge the buyer for, unless, by a specific date or within a specific time frame, the buyer notifies the seller not to provide the goods or services;
      2. does not include a prenotification negative option plan that is regulated by and complies with 16 C.F.R. Part 425;
    2. “seller” includes a person who engages in the business of selling, contracting for the sale of, or arranging for the sale of goods or services.

History. (§ 1 ch 57 SLA 2004; am § 46 ch 22 SLA 2015)

Cross references. —

For violation of this section as an unlawful trade practice, see AS 45.50.471(b) .

Effect of amendments. —

The 2015 amendment, effective July 1, 2015, in (e)(1)(B), substituted “16 C.F.R. Part 425” for “16 C.F.R. 425”.

Chapter 47. Indemnification Agreements Contra to Public Policy.

[Renumbered as AS 45.45.900 .]

Chapter 48. Personal Information Protection Act.

Effective dates. —

Section 10, ch. 92, SLA 2008 makes AS 45.48.010 45.48.460 , 45.48.480 , and AS 45.48.500 45.48.995 effective July 1, 2009. Section 8, ch. 92, SLA 2008 makes AS 45.48.470 effective June 14, 2008, in accordance with AS 01.10.070(c) .

Article 1. Breach of Security Involving Personal Information.

Sec. 45.48.010. Disclosure of breach of security.

  1. If a covered person owns or licenses personal information in any form that includes personal information on a state resident, and a breach of the security of the information system that contains personal information occurs, the covered person shall, after discovering or being notified of the breach, disclose the breach to each state resident whose personal information was subject to the breach.
  2. An information collector shall make the disclosure required by (a) of this section in the most expeditious time possible and without unreasonable delay, except as provided in AS 45.48.020 and as necessary to determine the scope of the breach and restore the reasonable integrity of the information system.
  3. Notwithstanding (a) of this section, disclosure is not required if, after an appropriate investigation and after written notification to the attorney general of this state, the covered person determines that there is not a reasonable likelihood that harm to the consumers whose personal information has been acquired has resulted or will result from the breach. The determination shall be documented in writing, and the documentation shall be maintained for five years. The notification required by this subsection may not be considered a public record open to inspection by the public.

History. (§ 4 ch 92 SLA 2008)

Sec. 45.48.020. Allowable delay in notification.

An information collector may delay disclosing the breach under AS 45.48.010 if an appropriate law enforcement agency determines that disclosing the breach will interfere with a criminal investigation. However, the information collector shall disclose the breach to the state resident in the most expeditious time possible and without unreasonable delay after the law enforcement agency informs the information collector in writing that disclosure of the breach will no longer interfere with the investigation.

History. (§ 4 ch 92 SLA 2008)

Sec. 45.48.030. Methods of notice.

An information collector shall make the disclosure required by AS 45.48.010

  1. by a written document sent to the most recent address the information collector has for the state resident;
  2. by electronic means if the information collector’s primary method of communication with the state resident is by electronic means or if making the disclosure by the electronic means is consistent with the provisions regarding electronic records and signatures required for notices legally required to be in writing under 15 U.S.C. 7001 et seq. (Electronic Signatures in Global and National Commerce Act); or
  3. if the information collector demonstrates that the cost of providing notice would exceed $150,000, that the affected class of state residents to be notified exceeds 300,000, or that the information collector does not have sufficient contact information to provide notice, by
    1. electronic mail if the information collector has an electronic mail address for the state resident;
    2. conspicuously posting the disclosure on the Internet website of the information collector if the information collector maintains an Internet website; and
    3. providing a notice to major statewide media.

History. (§ 4 ch 92 SLA 2008)

Sec. 45.48.040. Notification of certain other agencies.

  1. If an information collector is required by AS 45.48.010 to notify more than 1,000 state residents of a breach, the information collector shall also notify without unreasonable delay all consumer credit reporting agencies that compile and maintain files on consumers on a nationwide basis and provide the agencies with the timing, distribution, and content of the notices to state residents.
  2. This section may not be construed to require the information collector to provide the consumer reporting agencies identified under (a) of this section with the names or other personal information of the state residents whose personal information was subject to the breach.
  3. This section does not apply to an information collector who is subject to the Gramm-Leach-Bliley Financial Modernization Act.
  4. In this section, “consumer credit reporting agency that compiles and maintains files on consumers on a nationwide basis” has the meaning given to “consumer reporting agency that compiles and maintains files on consumers on a nationwide basis” in 15 U.S.C. 1681a(p).

History. (§ 4 ch 92 SLA 2008)

Sec. 45.48.050. Exception for employees and agents.

In AS 45.48.010 45.48.090 , the good faith acquisition of personal information by an employee or agent of an information collector for a legitimate purpose of the information collector is not a breach of the security of the information system if the employee or agent does not use the personal information for a purpose unrelated to a legitimate purpose of the information collector and does not make further unauthorized disclosure of the personal information.

History. (§ 4 ch 92 SLA 2008)

Sec. 45.48.060. Waivers.

A waiver of AS 45.48.010 45.48.090 is void and unenforceable.

History. (§ 4 ch 92 SLA 2008)

Sec. 45.48.070. Treatment of certain breaches.

  1. If a breach of the security of the information system containing personal information on a state resident that is maintained by an information recipient occurs, the information recipient is not required to comply with AS 45.48.010 45.48.030 . However, immediately after the information recipient discovers the breach, the information recipient shall notify the information distributor who owns the personal information or who licensed the use of the personal information to the information recipient about the breach and cooperate with the information distributor as necessary to allow the information distributor to comply with (b) of this section. In this subsection, “cooperate” means sharing with the information distributor information relevant to the breach, except for confidential business information or trade secrets.
  2. If an information recipient notifies an information distributor of a breach under (a) of this section, the information distributor shall comply with AS 45.48.010 45.48.030 as if the breach occurred to the information system maintained by the information distributor.

History. (§ 4 ch 92 SLA 2008)

Sec. 45.48.080. Violations.

  1. If an information collector who is a governmental agency violates AS 45.48.010 45.48.090 with regard to the personal information of a state resident, the information collector
    1. is liable to the state for a civil penalty of up to $500 for each state resident who was not notified under AS 45.48.010 45.48.090 , but the total civil penalty may not exceed $50,000; and
    2. may be enjoined from further violations.
  2. If an information collector who is not a governmental agency violates AS 45.48.010 45.48.090 with regard to the personal information of a state resident, the violation is an unfair or deceptive act or practice under AS 45.50.471 45.50.561 . However,
    1. the information collector is not subject to the civil penalties imposed under AS 45.50.551 but is liable to the state for a civil penalty of up to $500 for each state resident who was not notified under AS 45.48.010 45.48.090 , except that the total civil penalty may not exceed $50,000; and
    2. damages that may be awarded against the information collector under
      1. AS 45.50.531 are limited to actual economic damages that do not exceed $500; and
      2. AS 45.50.537 are limited to actual economic damages.
  3. The Department of Administration may enforce (a) of this section against a governmental agency. The procedure for review of an order or action of the department under this subsection is the same as the procedure provided by AS 44.62 (Administrative Procedure Act), except that the office of administrative hearings (AS 44.64.010 ) shall conduct the hearings in contested cases and the decision may be appealed under AS 44.64.030(c) .

History. (§ 4 ch 92 SLA 2008)

Sec. 45.48.090. Definitions.

In AS 45.48.010 45.48.090 ,

  1. “breach of the security” means unauthorized acquisition, or reasonable belief of unauthorized acquisition, of personal information that compromises the security, confidentiality, or integrity of the personal information maintained by the information collector; in this paragraph, “acquisition” includes acquisition by
    1. photocopying, facsimile, or other paper-based method;
    2. a device, including a computer, that can read, write, or store information that is represented in numerical form; or
    3. a method not identified by (A) or (B) of this paragraph;
  2. “covered person” means a
    1. person doing business;
    2. governmental agency; or
    3. person with more than 10 employees;
  3. “governmental agency” means a state or local governmental agency, except for an agency of the judicial branch;
  4. “information collector” means a covered person who owns or licenses personal information in any form if the personal information includes personal information on a state resident;
  5. “information distributor” means a person who is an information collector and who owns or licenses personal information to an information recipient;
  6. “information recipient” means a person who is an information collector but who does not own or have the right to license to another information collector the personal information received by the person from an information distributor;
  7. “personal information” means information in any form on an individual that is not encrypted or redacted, or is encrypted and the encryption key has been accessed or acquired, and that consists of a combination of
    1. an individual’s name; in this subparagraph, “individual’s name” means a combination of an individual’s
      1. first name or first initial; and
      2. last name; and
    2. one or more of the following information elements:
      1. the individual’s social security number;
      2. the individual’s driver’s license number or state identification card number;
      3. except as provided in (iv) of this subparagraph, the individual’s account number, credit card number, or debit card number;
      4. if an account can only be accessed with a personal code, the number in (iii) of this subparagraph and the personal code; in this sub-subparagraph, “personal code” means a security code, an access code, a personal identification number, or a password;
      5. passwords, personal identification numbers, or other access codes for financial accounts.

History. (§ 4 ch 92 SLA 2008)

Article 2. Credit Report and Credit Score Security Freeze.

Sec. 45.48.100. Security freeze authorized.

A consumer may prohibit a consumer credit reporting agency from releasing the consumer’s credit report or credit score without the express authorization of the consumer by placing a security freeze on the consumer’s credit report.

History. (§ 4 ch 92 SLA 2008)

Sec. 45.48.110. Placement of security freeze.

  1. To place a security freeze, a consumer shall make the request to the consumer credit reporting agency
    1. by mail to the address designated by the consumer credit reporting agency to receive security freeze requests; or
    2. as allowed by (b) of this section.
  2. A consumer may make a request under (a) of this section by telephone or by facsimile, the Internet, or other electronic media if the consumer credit reporting agency has developed procedures for using the telephone or an electronic medium to receive and process the request in an expedited manner.
  3. A consumer credit reporting agency shall place a security freeze within five business days after receiving a request under (a) or (b) of this section and proper identification from the consumer.

History. (§ 4 ch 92 SLA 2008)

Sec. 45.48.120. Confirmation of security freeze.

  1. Within 10 business days after a consumer makes the request under AS 45.48.110 , a consumer credit reporting agency shall send a written confirmation of the placement of the security freeze to the consumer. The confirmation must also inform the consumer that the consumer credit reporting agency may charge, as allowed by AS 45.48.160 , a fee for third-party access during the security freeze.
  2. At the same time that the consumer credit reporting agency sends a confirmation under (a) of this section, the consumer credit reporting agency shall provide the consumer with a unique personal identification number, password, or similar device to be used by the consumer when the consumer authorizes the release of the consumer’s credit report or credit score under AS 45.48.130 .

History. (§ 4 ch 92 SLA 2008)

Sec. 45.48.130. Access and actions during security freeze.

  1. While a security freeze is in place, a consumer credit reporting agency shall allow a third party access to a consumer’s credit report or credit score if the consumer requests that the consumer credit reporting agency allow the access.
  2. To make a request under (a) of this section, the consumer shall contact the consumer credit reporting agency by mail at the address designated by the consumer credit reporting agency to receive security freeze requests or as allowed by (c) of this section, authorize the consumer credit reporting agency to allow the access, and provide the consumer credit reporting agency with
    1. proper identification to verify the consumer’s identity;
    2. the unique personal identification number, password, or similar device provided under AS 45.48.120(b) ; and
    3. the proper information necessary to identify the third party to whom the consumer credit reporting agency may allow the access or the time period during which the consumer credit reporting agency may allow the access to third parties who request the access.
  3. In addition to making the request by mail, a consumer may make a request under (a) of this section by telephone or by facsimile, the Internet, or other electronic media if the consumer credit reporting agency has developed procedures for using the telephone or an electronic medium to receive and process the request in an expedited manner.
  4. Except as provided by (e) of this section, a consumer credit reporting agency that receives a request from a consumer under (b) or (c) of this section shall comply with the request within 15 minutes after receiving the request by telephone or by an electronic medium or within three business days after receiving the request by mail.
  5. A consumer credit reporting agency is not required to comply with a request under (a) of this section within the 15 minutes required by (d) of this section if
    1. the consumer fails to satisfy the requirements of (b) of this section;
    2. one of the following events prevents the consumer credit reporting agency from removing the security freeze within 15 minutes:
      1. an act of God, including a fire, earthquake, hurricane, storm, or similar natural disaster or phenomenon;
      2. an unauthorized or illegal act by another person, including terrorism, sabotage, riot, vandalism, labor strike, labor dispute disrupting operations, or similar occurrence;
      3. an operational interruption, including an electrical failure, unanticipated delay in equipment or replacement part delivery, computer hardware or software failure inhibiting response time, or similar disruption;
      4. governmental action, including an emergency order or regulation, a judicial law enforcement action, or a similar directive;
      5. regularly scheduled maintenance during other than normal business hours of the consumer credit reporting agency’s systems, or updates to the consumer credit reporting agency’s systems;
      6. commercially reasonable maintenance of, or repair to, the consumer credit reporting agency’s systems that is unexpected or unscheduled; or
    3. the request is received outside of normal business hours.
  6. If a security freeze is in place, a consumer credit reporting agency may not release the credit report or credit score to a third party without the prior express authorization of the consumer.
  7. If a security freeze is in place on a consumer’s credit report and credit score and if a third party applies to a consumer credit reporting agency to provide the third party with access to the consumer’s credit report or credit score, the consumer credit reporting agency and the third party may treat the third party’s application as incomplete unless the consumer authorizes the access under (a) of this section.
  8. If a security freeze is in place, a consumer credit reporting agency may not change the consumer’s official information in the consumer’s credit report and credit score without sending a written statement of the change to the consumer within 30 days after the change is made. A consumer credit reporting agency is not required to send a written statement if the consumer credit reporting agency makes a technical change in the consumer’s official information. If a consumer credit reporting agency makes a change, other than a technical change, in a consumer’s address, the consumer credit reporting agency shall send the written statement to the consumer at both the new address and the former address. In this subsection,
    1. “official information” means name, date of birth, social security number, and address;
    2. “technical change” means changing spelling, transposing numbers or letters, abbreviating a word, or spelling out an abbreviation.
  9. This section is not intended to prevent a consumer credit reporting agency from advising a third party that requests access to a consumer’s credit report or credit score that a security freeze is in effect.
  10. The procedures used by a consumer credit reporting agency for implementing the provisions of this section may include the use of telephone, facsimile, or electronic means if making the disclosure by the electronic means is consistent with the provisions regarding electronic records and signatures required for notices legally required to be in writing under 15 U.S.C. 7001 et seq. (Electronic Signatures in Global and National Commerce Act).

History. (§ 4 ch 92 SLA 2008)

Sec. 45.48.140. Removal of security freeze.

  1. Except as provided by AS 45.48.130 , a consumer credit reporting agency may not remove a security freeze unless
    1. the consumer requests that the consumer credit reporting agency remove the security freeze under (b) of this section; or
    2. the consumer made a material misrepresentation of fact to the consumer credit reporting agency when the consumer requested the security freeze under AS 45.48.110 ; if a consumer credit reporting agency intends to remove a security freeze on a consumer’s credit report under this paragraph, the consumer credit reporting agency shall notify the consumer in writing before removing the security freeze.
  2. A consumer credit reporting agency shall remove a security freeze within three business days after receiving a request for removal from the consumer who requested the security freeze.
  3. To make a request under (b) of this section, the consumer shall contact the consumer credit reporting agency by mail or as allowed by (d) of this section, authorize the consumer credit reporting agency to remove the security freeze, and provide the consumer credit reporting agency with
    1. proper identification to verify the consumer’s identity; and
    2. the unique personal identification number, password, or similar device provided under AS 45.48.120(b) .
  4. In addition to mail, a consumer may make a request under (b) of this section by telephone or by facsimile, the Internet, or other electronic media if the consumer credit reporting agency has developed procedures for using the telephone or an electronic medium to receive and process the request in an expedited manner.

History. (§ 4 ch 92 SLA 2008)

Sec. 45.48.150. Prohibition.

When dealing with a third party, a consumer credit reporting agency may not suggest, state, or imply that a consumer’s security freeze reflects a negative credit score, history, report, or rating.

History. (§ 4 ch 92 SLA 2008)

Sec. 45.48.160. Charges.

  1. Except as provided by (b), (c), or (d) of this section, a consumer credit reporting agency may not charge a consumer to place or remove a security freeze, to provide access under AS 45.48.130 , or to take any other action, including the issuance of a personal identification number, password, or similar device under AS 45.48.120 , that is related to the placement of, removal of, or allowing access to a credit report or credit score on which a security freeze has been placed.
  2. A consumer credit reporting agency may charge a consumer $5 for placing a security freeze.
  3. A consumer credit reporting agency may charge the consumer $2 for each access request made by the consumer. In this subsection, “access request” means a request made by the consumer under AS 45.48.130 to allow third-party access to the consumer’s credit report or credit score on which a security freeze has been placed.
  4. If a consumer fails to retain a personal identification number, password, or similar device issued under AS 45.48.120 , a consumer credit reporting agency may charge the consumer up to $5 for each time after the first time that the consumer credit reporting agency issues the consumer another personal identification number, password, or similar device because the consumer failed to retain the personal identification number, password, or similar device.
  5. A consumer credit reporting agency may not charge a consumer a fee under (b) or (c) of this section if the consumer has been a victim of identity theft and provides the consumer credit reporting agency with a complaint filed by the consumer with a law enforcement agency.

History. (§ 4 ch 92 SLA 2008)

Sec. 45.48.170. Notice of rights.

When a consumer credit reporting agency is required to give a consumer a summary of rights under 15 U.S.C. 1681g (Fair Credit Reporting Act), a consumer credit reporting agency shall also give the consumer the following notice:

Consumers Have the Right to Obtain a Security Freeze You may obtain a security freeze on your credit report and credit score for $5 to protect your privacy and ensure that credit is not granted in your name without your knowledge. You may not have to pay the $5 charge if you are a victim of identity theft. You have a right to place a security freeze on your credit report and credit score under state law ( — ). AS 45.48.100 45.48.290 The security freeze will prohibit a consumer credit reporting agency from releasing your credit score and any information in your credit report without your express authorization or approval. The security freeze is designed to prevent credit, loans, and other services from being approved in your name without your consent. However, you should be aware that using a security freeze to take control over who gets access to the personal and financial information in your credit report and credit score may delay, interfere with, or prohibit the timely approval of any subsequent request or application you make regarding a new loan, credit, a mortgage, a governmental service, a governmental payment, a cellular telephone, a utility, an Internet credit card application, an extension of credit at point of sale, and other items and services. When you place a security freeze on your credit report and credit score, within 10 business days, you will be provided a personal identification number, password, or similar device to use if you choose to remove the freeze on your credit report and credit score or to temporarily authorize the release of your credit report and credit score to a specific third party or specific third parties or for a specific period of time after the freeze is in place. To provide that authorization, you must contact the consumer credit reporting agency and provide all of the following: (1) proper identification to verify your identity; (2) the personal identification number, password, or similar device provided by the consumer credit reporting agency; (3) proper information necessary to identify the third party or third parties who are authorized to receive the credit report and credit score or the specific period of time for which the credit report and credit score are to be available to third parties. A consumer credit reporting agency that receives your request to temporarily lift a freeze on a credit report and credit score is required to comply with the request within 15 minutes, except after normal business hours and under certain other conditions, after receiving your request if you make the request by telephone, or an electronic method if the agency provides an electronic method, or within three business days after receiving your request if you make the request by mail. The consumer credit reporting agency may charge you $2 to temporarily lift the freeze. A security freeze does not apply to circumstances where you have an existing account relationship and a copy of your credit report and credit score are requested by your existing creditor or its agents or affiliates for certain types of account review, collection, fraud control, or similar activities. If you are actively seeking credit, you should understand that the procedures involved in lifting a security freeze may slow your own applications for credit. You should plan ahead and lift a freeze, either completely if you are shopping around, or specifically for a certain creditor, days before applying for new credit. You have a right to bring a civil action against someone who violates your rights under these laws on security freezes. The action can be brought against a consumer credit reporting agency.

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History. (§ 4 ch 92 SLA 2008)

Sec. 45.48.180. Notification after violation.

If a consumer credit reporting agency violates a security freeze by releasing a consumer’s credit report or credit score, the consumer credit reporting agency shall notify the consumer within five business days after discovering or being notified of the release, and the information in the notice must include an identification of the information released and of the third party who received the information.

History. (§ 4 ch 92 SLA 2008)

Sec. 45.48.190. Resellers.

A consumer credit reporting agency that acts as a reseller of consumer information shall honor a security freeze placed on a consumer’s credit report and credit score by another consumer credit reporting agency.

History. (§ 4 ch 92 SLA 2008)

Sec. 45.48.200. Violations and penalties.

  1. A consumer who suffers damages as a result of a person’s violation of AS 45.48.100 45.48.290 may bring an action in court against the person and recover, in the case of a violation where the person acted
    1. negligently, actual economic damages, court costs allowed by the rules of court, and full reasonable attorney fees;
    2. knowingly,
      1. damages as described in (1) of this subsection;
      2. punitive damages that are not less than $100 or more than $5,000 for each violation as the court determines to be appropriate; and
      3. other relief that the court determines to be appropriate.
  2. A consumer may bring an action in court against a person for a violation or threatened violation of AS 45.48.100 45.48.290 for injunctive relief, whether or not the consumer seeks another remedy under this section.
  3. Notwithstanding (a)(2) of this section, a person who knowingly violates AS 45.48.100 45.48.290 is liable in a class action for an amount that the court allows. When determining the amount of an award in a class action under this subsection, the court shall consider, among the relevant factors, the amount of any actual damages awarded, the frequency of the violations, the resources of the violator, and the number of consumers adversely affected.
  4. In this section, “knowingly” has the meaning given in AS 11.81.900 .

History. (§ 4 ch 92 SLA 2008; am § 37 ch 3 SLA 2017)

Cross references. —

For the effect of (a) of this section on Rule 82, Alaska Rules of Civil Procedure, on criteria to be applied in the award of attorney fees, see § 6(b), ch. 92, SLA 2008 in the 2008 Temporary and Special Acts.

Effect of amendments. —

The 2017 amendment, effective July 1, 2017, in (a)(2)(B), substituted “less than $100 or” for “less than $100 nor” following “damages that are not”.

Sec. 45.48.210. Exemptions.

  1. The provisions of AS 45.48.100 45.48.290 do not apply to the use of a credit report by
    1. a person, the person’s subsidiary, affiliate, or agent, or the person’s assignee with whom a consumer has or, before the assignment, had an account, contract, or debtor-creditor relationship if the purpose of the use is to review the consumer’s account or to collect a financial obligation owing on the account, contract, or debt;
    2. a subsidiary, an affiliate, an agent, an assignee, or a prospective assignee of a person to whom access has been granted under AS 45.48.130 if the purpose of the use is to facilitate the extension of credit or another permissible use;
    3. a person acting under a court order, warrant, or subpoena;
    4. an agency of a state or municipality that administers a program for establishing and enforcing child support obligations;
    5. the Department of Health and Social Services, its agents, or its assigns when investigating fraud;
    6. the Department of Revenue, its agents, or its assigns when investigating or collecting delinquent taxes or unpaid court orders or when implementing its other statutory responsibilities;
    7. a person if the purpose of the use is prescreening allowed under 15 U.S.C. 1681b(c) (Fair Credit Reporting Act);
    8. a person administering a credit file monitoring subscription service to which the consumer has subscribed;
    9. a person providing a consumer with a copy of the consumer’s credit report or credit score at the consumer’s request;
    10. a person if the database or file of the consumer credit reporting agency consists entirely of information concerning and used solely for one or more of the following purposes:
      1. criminal record information;
      2. personal loss history information;
      3. fraud prevention or detection;
      4. tenant screening; or
      5. employment screening; or
    11. a person for use for insurance purposes in setting a rate, adjusting a rate, adjusting a claim, or underwriting, except that this paragraph may not be interpreted to authorize an insurance practice that is prohibited by other law; this paragraph may not be interpreted to affect AS 21.36.460 or AS 21.39.035 .
  2. Except as provided by AS 45.48.190 , the provisions of AS 45.48.100 45.48.290 do not apply to a person when acting only as a reseller of consumer information.

History. (§ 4 ch 92 SLA 2008)

Sec. 45.48.220. Request by parent or legal guardian.

A parent, legal guardian, or conservator of a minor, incapacitated person, or protected person may make a request under AS 45.48.100 - 45.48.290 on behalf of a consumer who is the minor, incapacitated person, or protected person under the supervision of that parent, legal guardian, or conservator. If a consumer credit report does not exist at the time of a request under this section, the consumer credit reporting agency shall generate a consumer credit report for the purpose of placing a security freeze. In this section,

  1. “conservator” means a person appointed or qualified by a court to manage the property of an individual or a person legally authorized to perform substantially the same functions;
  2. “incapacitated person” has the meaning given in AS 47.24.900 ;
  3. “minor” means a child under 18 years of age who has not had the disabilities of a minor removed as described in AS 09.55.590 ;
  4. “protected person” has the meaning given in AS 13.27.490 .

History. (§ 1 ch 22 SLA 2016)

Effective dates. —

Section 1, ch. 22, SLA 2016 makes this section effective September 17, 2016.

Sec. 45.48.290. Definitions.

In AS 45.48.100 45.48.290 ,

  1. “account review” means activities related to account maintenance, account monitoring, credit line increases, and account upgrades and enhancements;
  2. “consumer” means an individual who is the subject of a credit report or credit score;
  3. “consumer credit reporting agency” has the meaning given in AS 45.48.990 , but does not include a person who issues reports
    1. on incidents of fraud or authorizations for the purpose of approving or processing negotiable instruments, electronic funds transfers, or similar methods of payments; or
    2. regarding account closures because of fraud, substantial overdrafts, automated teller machine abuse, or similar negative information regarding a consumer to inquiring banks or other financial institutions for use only in reviewing consumer requests for deposit accounts at the inquiring banks or financial institutions;
  4. “reseller of consumer information” means a person who assembles and merges information contained in the databases of consumer credit reporting agencies and does not maintain a permanent database of consumer information from which new consumer credit reports are produced;
  5. “security freeze” means a prohibition against a consumer credit reporting agency’s releasing a consumer’s credit report or credit score without the express authorization of the consumer;
  6. “third party” means a person who is not
    1. the consumer who is the subject of the consumer’s credit report or credit score; or
    2. the consumer credit reporting agency that is holding the consumer’s credit report or credit score.

History. (§ 4 ch 92 SLA 2008)

Article 3. Protection of Social Security Number.

Sec. 45.48.400. Use of social security number.

  1. A person may not
    1. intentionally communicate or otherwise make available to the general public an individual’s social security number;
    2. print an individual’s social security number on a card required for the individual to access products or services provided by the person;
    3. require an individual to transmit the individual’s social security number over the Internet unless the Internet connection is secure or the social security number is encrypted;
    4. require an individual to use the individual’s social security number to access an Internet website unless a password, a unique personal identification number, or another authentication device is also required to access the website; or
    5. print an individual’s social security number on material that is mailed to the individual unless
      1. local, state, or federal law, including a regulation adopted under AS 45.48.470 , expressly authorizes placement of the social security number on the material; or
      2. the social security number is included on an application or other form, including a document sent as a part of an application process or an enrollment process, sent by mail to establish, amend, or terminate an account, a contract, or a policy, or to confirm the accuracy of the social security number; however, a social security number allowed to be mailed under this subparagraph may not be printed, in whole or in part, on a postcard or other mailer that does not require an envelope, or in a manner that makes the social security number visible on the envelope or without the envelope’s being opened.
  2. The prohibitions in (a) of this section do not apply if the person is engaging in the business of government and
    1. is authorized by law to communicate or otherwise make available to the general public the individual’s social security number; or
    2. the communicating or otherwise making available of the individual’s social security number is required for the performance of the person’s duties or responsibilities as provided by law.

History. (§ 4 ch 92 SLA 2008)

Sec. 45.48.410. Request and collection.

  1. A person who does business in the state, including the business of government, may not request or collect from an individual the individual’s social security number. This subsection does not prohibit a person from asking for another form of identification from the individual.
  2. The prohibition in (a) of this section does not apply
    1. if the person is authorized by local, state, or federal law, including a regulation adopted under AS 45.48.470 , to demand proof of the individual’s social security number, to request or collect the individual’s social security number, or to submit the individual’s social security number to the local, state, or federal government;
    2. if the person is engaging in the business of government and
      1. is authorized by law to request or collect the individual’s social security number; or
      2. the request or collection of the individual’s social security number is required for the performance of the person’s duties or responsibilities as provided by law;
    3. to a person subject to or a transaction regulated by the Gramm-Leach-Bliley Financial Modernization Act for a purpose authorized by the Gramm-Leach-Bliley Financial Modernization Act;
    4. to a person subject to or a transaction regulated by the Fair Credit Reporting Act for a purpose authorized by the Fair Credit Reporting Act;
    5. if the request or collection is for a background check on the individual, for fraud prevention, for medical treatment, for law enforcement or other government purposes, for the individual’s employment, including employment benefits, or for verification of the individual’s age;
    6. if the request or collection does not have independent economic value, is incidental to a larger transaction or a larger anticipated transaction, and is necessary to verify the identity of the individual;
    7. to an insurer regulated by AS 21; in this paragraph, “insurer” has the meaning given in AS 21.97.900 ; or
    8. to a hospital service corporation or a medical service corporation regulated under AS 21.87; in this paragraph, “hospital service corporation” and “medical service corporation” have the meanings given in AS 21.87.330 .

History. (§ 4 ch 92 SLA 2008)

Revisor’s notes. —

In 2010, in (b)(7) of this section, “AS 21.97.900 ” was substituted for “AS 21.90.900 ” to reflect the 2010 renumbering of AS 21.90.900 .

Cross references. —

For penalties for misdemeanors, see AS 12.55.035 and 12.55.135 .

Sec. 45.48.420. Sale, lease, loan, trade, or rental.

  1. A person may not sell, lease, loan, trade, or rent an individual’s social security number to a third party.
  2. The prohibition in (a) of this section does not apply if the sale, lease, loan, trade, or rental is
    1. authorized by local, state, or federal law, including a regulation adopted under AS 45.48.470 ;
    2. by a person subject to or for a transaction regulated by the Gramm-Leach-Bliley Financial Modernization Act for a purpose authorized by the Gramm-Leach-Bliley Financial Modernization Act;
    3. by a person subject to or for a transaction regulated by the Fair Credit Reporting Act for a purpose authorized by the Fair Credit Reporting Act; or
    4. part of a report prepared by a consumer credit reporting agency in response to a request by a person and the person submits the social security number as part of the request to the consumer credit reporting agency for the preparation of the report.
  3. Nothing in this section prevents a business from transferring social security numbers to another person if the transfer is part of the sale or other transfer of the business to the other person.
  4. A transfer of an individual’s social security number for the sole purpose of identifying a person about whom a report or database check is ordered, received, or provided is not a sale, lease, loan, trade, or rental of a social security number under this section.
  5. A person who knowingly violates (a) of this section is guilty of a class A misdemeanor. In this subsection, “knowingly” has the meaning given in AS 11.81.900 .

History. (§ 4 ch 92 SLA 2008)

Cross references. —

For penalties for misdemeanors, see AS 12.55.035 and 12.55.135 .

Sec. 45.48.430. Disclosure.

  1. A person doing business, including the business of government, may not disclose an individual’s social security number to a third party.
  2. The prohibition in (a) of this section does not apply if
    1. the disclosure is authorized by local, state, or federal law, including a regulation adopted under AS 45.48.470 ;
    2. the person is engaging in the business of government and
      1. is authorized by law to disclose the individual’s social security number; or
      2. the disclosure of the individual’s social security number is required for the performance of the person’s duties or responsibilities as provided by law;
    3. the disclosure is to a person subject to or for a transaction regulated by the Gramm-Leach-Bliley Financial Modernization Act, and the disclosure is for a purpose authorized by the Gramm-Leach-Bliley Financial Modernization Act or to facilitate a transaction of the individual;
    4. the disclosure is to a person subject to or for a transaction regulated by the Fair Credit Reporting Act, and the disclosure is for a purpose authorized by the Fair Credit Reporting Act;
    5. the disclosure is part of a report prepared by a consumer credit reporting agency in response to a request by a person and the person submits the social security number as part of the request to the consumer credit reporting agency for the preparation of the report; or
    6. the disclosure is for a background check on the individual, identity verification, fraud prevention, medical treatment, law enforcement or other government purposes, or the individual’s employment, including employment benefits.

History. (§ 4 ch 92 SLA 2008)

Sec. 45.48.440. Interagency disclosure.

Notwithstanding the other provisions of AS 45.48.400 45.48.480 , a state or local governmental agency may disclose an individual’s social security number to another state or local governmental agency or to an agency of the federal government if the disclosure is required in order for the agency to carry out the agency’s duties and responsibilities.

History. (§ 4 ch 92 SLA 2008)

Sec. 45.48.450. Exception for employees, agents, and independent contractors.

  1. Notwithstanding the other provisions of AS 45.48.400 45.48.480 , a person may disclose an individual’s social security number to an employee or agent of the person for a legitimate purpose established by and as directed by the person, but the employee or agent may not use the social security number for another purpose or make an unauthorized disclosure of the individual’s personal information.
  2. Notwithstanding the other provisions of AS 45.48.400 45.48.480 , and except as provided for an agent under (a) of this section, a person may disclose an individual’s social security number to an independent contractor of the person to facilitate the purpose or transaction for which the individual initially provided the social security number to the person, but the independent contractor may not use the social security number for another purpose or make an unauthorized disclosure of the individual’s personal information. In this subsection, “independent contractor” includes a debt collector.

History. (§ 4 ch 92 SLA 2008)

Sec. 45.48.460. Employment-related exception.

The provisions of AS 45.48.400 45.48.480 may not be construed to restrict a person’s use or exchange of an individual’s social security number

  1. in the course of the administration of a claim, benefit, or procedure related to the individual’s employment by the person, including the individual’s termination from employment, retirement from employment, and injury suffered during the course of employment; or
  2. to check on an unemployment insurance claim of the individual.

History. (§ 4 ch 92 SLA 2008)

Sec. 45.48.470. Agency regulations.

If regulations are necessary in order for a state agency to carry out the state agency’s duties and responsibilities, a state agency may adopt regulations under AS 44.62 (Administrative Procedure Act) to establish when the state agency or a person regulated by the state agency may

  1. print an individual’s social security number on material that is mailed to the individual;
  2. demand proof from an individual of the individual’s social security number, collect from an individual the individual’s social security number, or submit an individual’s social security number to a local, state, or federal agency;
  3. ask an individual to provide the state agency with the individual’s social security number;
  4. disclose an individual’s social security number to a third party;
  5. sell, lease, loan, trade, or rent an individual’s social security number to a third party.

History. (§ 4 ch 92 SLA 2008)

Sec. 45.48.480. Penalties.

  1. A person who knowingly violates AS 45.48.400 45.48.430 is liable to the state for a civil penalty not to exceed $3,000.
  2. An individual may bring a civil action in court against a person who knowingly violates AS 45.48.400 45.48.430 and may recover actual economic damages, court costs allowed by the rules of court, and full reasonable attorney fees.
  3. In this section, “knowingly” has the meaning given in AS 11.81.900 .

History. (§ 4 ch 92 SLA 2008)

Cross references. —

For the effect of (b) of this section on Rule 82, Alaska Rules of Civil Procedure, on criteria to be applied in the award of attorney fees, see § 6(b), ch. 92, SLA 2008 in the 2008 Temporary and Special Acts.

Article 4. Disposal of Records.

Sec. 45.48.500. Disposal of records.

  1. When disposing of records that contain personal information, a business and a governmental agency shall take all reasonable measures necessary to protect against unauthorized access to or use of the records.
  2. Notwithstanding (a) of this section, if a business or governmental agency has otherwise complied with the provisions of AS 45.48.500 45.48.590 in the selection of a third party engaged in the business of record destruction, the business or governmental agency is not liable for the disposal of records under AS 45.48.500 45.48.590 after the business or governmental agency has relinquished control of the records to the third party for the destruction of the records.
  3. A business or governmental agency is not liable for the disposal of records under AS 45.48.500 45.48.590 after the business or governmental agency has relinquished control of the records to the individual to whom the records pertain.

History. (§ 4 ch 92 SLA 2008)

Sec. 45.48.510. Measures to protect access.

The measures that may be taken to comply with AS 45.48.500 include

  1. implementing and monitoring compliance with policies and procedures that require the burning, pulverizing, or shredding of paper documents containing personal information so that the personal information cannot practicably be read or reconstructed;
  2. implementing and monitoring compliance with policies and procedures that require the destruction or erasure of electronic media and other nonpaper media containing personal information so that the personal information cannot practicably be read or reconstructed;
  3. after due diligence, entering into a written contract with a third party engaged in the business of record destruction to dispose of records containing personal information in a manner consistent with AS 45.48.500 45.48.590 .

History. (§ 4 ch 92 SLA 2008)

Sec. 45.48.520. Due diligence.

In AS 45.48.510 (3), due diligence ordinarily includes performing one or more of the following:

  1. reviewing an independent audit of the third party’s operations and its compliance with AS 45.48.500 45.48.590 ;
  2. obtaining information about the third party from several references or other reliable sources and requiring that the third party be certified by a recognized trade association or similar organization with a reputation for high standards of quality review; or
  3. reviewing and evaluating the third party’s information security policies and procedures, or taking other appropriate measures to determine the competency and integrity of the third party.

History. (§ 4 ch 92 SLA 2008)

Sec. 45.48.530. Policy and procedures.

A business or governmental agency shall adopt written policies and procedures that relate to the adequate destruction and proper disposal of records containing personal information and that are consistent with AS 45.48.500 45.48.590 .

History. (§ 4 ch 92 SLA 2008)

Sec. 45.48.540. Exemptions.

  1. A business or a governmental agency is not required to comply with AS 45.48.500 45.48.530 if federal law requires that the business or governmental agency act in a way that does not comply with AS 45.48.500 45.48.530 .
  2. A business is not required to comply with AS 45.48.500 45.48.530 if
    1. the business is subject to and in compliance with the Gramm-Leach-Bliley Financial Modernization Act; or
    2. the manner of the disposal of the records of the business is subject to 15 U.S.C. 1681w (Fair Credit Reporting Act) and the business is complying with 15 U.S.C. 1681w.

History. (§ 4 ch 92 SLA 2008; am § 47 ch 22 SLA 2015)

Effect of amendments. —

The 2015 amendment, effective July 1, 2015, in (b)(2), substituted “15 U.S.C.1681w” for “15 U.S.C. 1861w”.

Sec. 45.48.550. Civil penalty.

  1. An individual, a business, or a governmental agency that knowingly violates AS 45.48.500 45.48.590 is liable to the state for a civil penalty not to exceed $3,000.
  2. In this section, “knowingly” has the meaning given in AS 11.81.900 .

History. (§ 4 ch 92 SLA 2008)

Sec. 45.48.560. Court action.

An individual who is damaged by a violation of AS 45.48.500 45.48.590 may bring a civil action in court to enjoin further violations and to recover for the violation actual economic damages, court costs allowed by the rules of court, and full reasonable attorney fees.

History. (§ 4 ch 92 SLA 2008)

Cross references. —

For the effect of this section on Rule 82, Alaska Rules of Civil Procedure, on criteria to be applied in the award of attorney fees, see § 6(b), ch. 92, SLA 2008 in the 2008 Temporary and Special Acts.

Sec. 45.48.590. Definitions.

In AS 45.48.500 45.48.590 ,

  1. “business” means a person who conducts business in the state or a person who conducts business and maintains or otherwise possesses personal information on state residents; in this paragraph,
    1. “conducts business” includes engaging in activities as a financial institution organized, chartered, or holding a license or authorization certificate under the laws of this state, another state, the United States, or another country;
    2. “possesses” includes possession for the purpose of destruction;
  2. “dispose” means
    1. the discarding or abandonment of records containing personal information;
    2. the sale, donation, discarding, or transfer of
      1. any medium, including computer equipment or computer media, that contains records of personal information;
      2. nonpaper media, other than that identified under (i) of this subparagraph, on which records of personal information are stored; and
      3. equipment for nonpaper storage of information;
  3. “governmental agency” means a state or local governmental agency, except for an agency of the judicial branch;
  4. “personal information” means
    1. an individual’s passport number, driver’s license number, state identification number, bank account number, credit card number, debit card number, other payment card number, financial account information, or information from a financial application; or
    2. a combination of an individual’s
      1. name; and
      2. medical information, insurance policy number, employment information, or employment history;
  5. “records” means material on which information that is written, drawn, spoken, visual, or electromagnetic is recorded or preserved, regardless of physical form or characteristics, but does not include publicly available information containing names, addresses, telephone numbers, or other information an individual has voluntarily consented to have publicly disseminated or listed.

History. (§ 4 ch 92 SLA 2008)

Article 5. Factual Declaration of Innocence after Identity Theft; Right to File Police Report Regarding Identity Theft.

Sec. 45.48.600. Factual declaration of innocence after identity theft.

  1. A victim of identity theft may petition the superior court for a determination that the victim is factually innocent of a crime if
    1. the perpetrator of the identity theft was arrested for, cited for, or convicted of the crime using the victim’s identity;
    2. a criminal complaint was filed against the perpetrator of the identity theft; and
    3. the victim’s identity was mistakenly associated with a record of a conviction for a crime.
  2. In addition to a petition by a victim under (a) of this section, the department may petition the superior court for a determination under (a) of this section, or the superior court may, on its own motion, make a determination under (a) of this section.

History. (§ 4 ch 92 SLA 2008)

Sec. 45.48.610. Basis for determination.

A determination of factual innocence under AS 45.48.600 may be heard and made on declarations, affidavits, police reports, or other material, relevant, and reliable information submitted by the parties or ordered to be made a part of the record by the court.

History. (§ 4 ch 92 SLA 2008)

Sec. 45.48.620. Criteria for determination; court order.

  1. A court may determine that a petitioner under AS 45.48.600 is factually innocent of a crime if the court finds beyond a reasonable doubt that
    1. the petitioner is a victim of identity theft;
    2. the petitioner did not commit the offense for which the perpetrator of the identity theft was arrested, cited, or convicted;
    3. the petitioner filed a criminal complaint against the perpetrator of the identity theft; and
    4. the petitioner’s identity was mistakenly associated with a record of conviction for the crime.
  2. If a court finds under this section that the victim is factually innocent of a crime, the court shall issue an order indicating this determination of factual innocence and shall provide the victim with a copy of the order.

History. (§ 4 ch 92 SLA 2008)

Sec. 45.48.630. Orders regarding records.

After a court issues an order under AS 45.48.620 , the court may order the name and associated personal information of the victim of identity theft that is contained in the files, indexes, and other records of the court that are accessible by the public labeled to show that the name and personal information of the victim of identity theft is incorrect.

History. (§ 4 ch 92 SLA 2008)

Sec. 45.48.640. Vacation of determination.

A court that has issued an order under AS 45.48.620 may, at any time, vacate the order if the petition, or any information submitted in support of the petition, is found to contain a material misrepresentation, an omission, or false information.

History. (§ 4 ch 92 SLA 2008)

Cross references. —

For the effect of this section on Rule 60(b), Alaska Rules of Civil Procedure, relating to the authority of a court to vacate an order, see § 6(a), ch. 92, SLA 2008 in the 2008 Temporary and Special Acts.

Sec. 45.48.650. Court form.

The supreme court of the state may develop a form to be used for the order under AS 45.48.620 .

History. (§ 4 ch 92 SLA 2008)

Sec. 45.48.660. Database.

The department may establish and maintain a database of individuals who have been victims of identity theft and who have received an order under AS 45.48.620 . The department shall provide a victim or the victim’s authorized representative access to a database established under this section to establish that the individual has been a victim of identity theft. Access to the database established under this section is limited to criminal justice agencies, victims of identity theft, and individuals and agencies authorized by the victims.

History. (§ 4 ch 92 SLA 2008)

Sec. 45.48.670. Toll-free telephone number.

The department may establish and maintain a toll-free telephone number to provide access to information in a database established under AS 45.48.660 .

History. (§ 4 ch 92 SLA 2008)

Sec. 45.48.680. Right to file police report regarding identity theft.

  1. Even if the local law enforcement agency does not have jurisdiction over the theft of an individual’s identity, if an individual who has learned or reasonably suspects the individual has been the victim of identity theft contacts, for the purpose of filing a complaint, a local law enforcement agency that has jurisdiction over the individual’s actual place of residence, the local law enforcement agency shall make a report of the matter and provide the individual with a copy of the report. The local law enforcement agency may refer the matter to a law enforcement agency in a different jurisdiction.
  2. This section is not intended to interfere with the discretion of a local law enforcement agency to allocate its resources to the investigation of crime. A local law enforcement agency is not required to count a complaint filed under (a) of this section as an open case for purposes that include compiling statistics on its open cases.

History. (§ 4 ch 92 SLA 2008)

Sec. 45.48.690. Definitions.

In AS 45.48.600 45.48.690 ,

  1. “crime” has the meaning given in AS 11.81.900 ;
  2. “department” means the Department of Law;
  3. “perpetrator” means the person who perpetrated the theft of an individual’s identity;
  4. “victim” means an individual who is the victim of identity theft.

History. (§ 4 ch 92 SLA 2008)

Article 6. Truncation of Card Information.

Sec. 45.48.750. Truncation of card information.

  1. A person who accepts credit cards or debit cards for the transaction of business may not print more than the last four digits of the card number or the expiration date on any receipt or other physical record of the transaction provided at the point of the sale or transaction.
  2. This section applies only to receipts that are electronically printed and does not apply to transactions in which the sole means of recording a credit card or debit card account number is by handwriting or by an imprint or copy of the card.
  3. A person may not sell a device that electronically prints more than the last four digits of a credit card or debit card number or expiration date on a consumer receipt for a business transaction or on a copy retained by a business person for a business transaction.
  4. An individual may bring a civil action in court against a person who knowingly violates (a) of this section and may recover actual economic damages, court costs allowed by the rules of court, and full reasonable attorney fees.
  5. A person who knowingly violates this section is liable to the state for a civil penalty not to exceed $3,000.
  6. In this section,
    1. “credit” means the right granted by a creditor to a debtor to defer payment of debt, to incur debts and defer payment of the debt, or to purchase property or services and defer payment of the purchase; in this paragraph, “creditor” means a person who regularly extends, renews, or continues credit, a person who regularly arranges for the extension, renewal, or continuation of credit, or an assignee of an original creditor who participates in the decision to extend, renew, or continue credit;
    2. “credit card” means a card, plate, coupon book, or other credit device existing for the purpose of obtaining money, property, labor, or services on credit;
    3. “debit card” means a card issued by a financial institution to a consumer for use in initiating an electronic fund transfer from the account of the consumer at the financial institution for the purpose of transferring money between accounts or obtaining money, property, labor, or services;
    4. “knowingly” has the meaning given in AS 11.81.900 .

History. (§ 4 ch 92 SLA 2008)

Cross references. —

For the effect of (d) of this section on Rule 82, Alaska Rules of Civil Procedure, on criteria to be applied in the award of attorney fees, see § 6(b), ch. 92, SLA 2008 in the 2008 Temporary and Special Acts.

Article 7. General Provisions.

Sec. 45.48.990. Definitions.

In this chapter, unless the context indicates otherwise,

  1. “consumer” means an individual;
  2. “consumer credit reporting agency” means a person who, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages, in whole or in part, in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing credit reports to third parties;
  3. “credit report” means a consumer report that a consumer credit reporting agency furnishes to a person that the consumer credit reporting agency has reason to believe intends to use the consumer report as a factor in establishing the consumer’s eligibility for credit to be used primarily for personal, family, or household purposes; in this paragraph, “consumer report” has the meaning given to “consumer report” in 15 U.S.C. 1681a(d) (Fair Credit Reporting Act), except that “consumer reporting agency” in 15 U.S.C. 1681a(d) is to be read as “consumer credit reporting agency”;
  4. “Fair Credit Reporting Act” means 15 U.S.C. 1681 — 1681x;
  5. “Gramm-Leach-Bliley Financial Modernization Act” means 15 U.S.C. 6801 — 6827;
  6. “identity theft” means the theft of the identity of an individual;
  7. “information system” means any information system, including a system consisting of digital databases and a system consisting of pieces of paper;
  8. “person” has the meaning given in AS 01.10.060 and includes a state or local governmental agency, except for an agency of the judicial branch;
  9. “state resident” means an individual who satisfies the residency requirements under AS 01.10.055 .

History. (§ 4 ch 92 SLA 2008)

Sec. 45.48.995. Short title.

This chapter may be cited as the Alaska Personal Information Protection Act.

History. (§ 4 ch 92 SLA 2008)

Chapter 50. Competitive Practices, Regulation of Competition, Consumer Protection.

Article 1. Trademarks.

Sec. 45.50.010. Registrability.

  1. A mark may not be registered if it consists of or comprises
    1. immoral, deceptive, or scandalous matter;
    2. matter that may disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt or disrepute;
    3. the flag, coat of arms, or other insignia of the United States, this or another state, a municipality of this or another state, a foreign nation, or simulation of any of these;
    4. the name, signature, or portrait identifying a living individual, except with the written consent of the individual;
    5. a mark that, (A) when used on or in connection with goods or services of the applicant, is merely descriptive or deceptively misdescriptive of them; (B) when used on or in connection with the goods or services of the applicant, is primarily geographically descriptive or deceptively misdescriptive of them; (C) is primarily merely a surname; however, this paragraph does not prevent the registration of a mark used by the applicant that has become distinctive of the applicant’s goods or services; the commissioner may accept as evidence that the mark has become distinctive, as used on or in connection with the applicant’s goods or services, proof of continuous use of the mark as a mark by the applicant in this state for the five years immediately preceding the date on which the claim of distinctiveness is made;
    6. a mark that so resembles a mark registered in the state or in the United States Patent and Trademark Office, or a mark previously used by another and not abandoned, as to be likely, when used on or in connection with the goods or services of the applicant, to cause confusion or mistake or to deceive; or
    7. a mark that so resembles the name of another organized entity, or a reserved or registered name, that the mark is likely to cause confusion or mistake or to deceive; the form of operation of the organized entity without the mark, or of the person without the mark who holds the right to the reserved or registered name, is not a factor in determining whether the mark resembles a name under this paragraph; in this paragraph, “organized entity” and “reserved or registered name” have the meanings given in AS 10.35.040 .
  2. For purposes of this section,
    1. “descriptive” means a word or combination of words that describes one or more of the characteristics of the goods or services, such as, what the goods or services are, what the goods are made of, or what the goods or services are used for; however, an otherwise descriptive word or combination of words can, as a secondary meaning, become accepted as identifying the goods or services of the applicant, in which case it is no longer merely descriptive;
    2. “misdescriptive” means a word or combination of words that falsely describes the nature, function, or capacity of goods or services.

History. (§ 2 ch 84 SLA 1961; am § 106 ch 59 SLA 1982; am §§ 3, 4 ch 132 SLA 1996; am § 35 ch 50 SLA 1999)

Revisor’s notes. —

Subparagraph indentation in paragraph (a)(5) was removed in 1996 to conform this section to the 1961 enactment and to current drafting style.

Cross references. —

For legislative intent relating to ch. 132, SLA 1996, see § 1, ch. 132, SLA 1996 in the Temporary and Special Acts.

Editor’s notes. —

Section 36(c), ch. 50, SLA 1999 provides that (a)(7) of this section “does not invalidate the registration of a mark that is registered under AS 45.50.010 45.50.205 before July 1, 1999.”

Opinions of attorney general. —

This chapter was not intended to inaugurate radically different or original principles regarding trademarks. It has been adopted from trademark statutes in effect in a number of other states. 1967 Alas. Op. Att'y Gen. No. 1.

Another company could use the same mark in an unrelated class of goods, if it would not be likely, when applied to the goods of the applicant, to cause confusion or mistake or to deceive. 1967 Alas. Op. Att'y Gen. No. 1.

Two or more companies with different marks, but with the same names included in the marks, would be applicable for registration, absent a showing that the second mark would be likely to cause confusion or mistake or deception. 1967 Alas. Op. Att'y Gen. No. 1.

Collateral references. —

74 Am. Jur. 2d, Trademarks and Tradenames, § 55 et seq.

87 C.J.S. Trademarks, etc., § 33 et seq.

Parody as trademark or tradename dilution or infringement, 179 ALR Fed. 181.

Initial interest confusion doctrine under Lanham Trademark Act, 183 A.L.R. Fed. 553.

Reverse confusion doctrine under Lanham Trademark Act, 187 ALR Fed. 271.

Sec. 45.50.020. Application for registration.

Subject to limitations under AS 45.50.010 45.50.205 , a person who uses a mark in the state may file with the commissioner, on a form furnished by the department and in a manner complying with AS 45.50.010 45.50.205 , an application for registration of that mark setting out the following information:

  1. the name and business address of the registrant and, if the registrant is a
    1. corporation, the state of incorporation; or
    2. partnership, the state in which the partnership is organized and the names of the general partners;
  2. the goods or services on or in connection with which the mark is used, the manner in which the mark is used on or in connection with the goods or services, and the class of the goods or services;
  3. the date when the mark was first used anywhere and the date when it was first used in this state by the applicant or a predecessor in interest;
  4. a statement that the applicant is the owner of the mark, that the mark is in use, and that, to the knowledge of the individual signing the application, no other person has the right to use the mark either in the identical form or in a near resemblance to it as to be likely, when applied to the goods or services of another person, to cause confusion or mistake, or to deceive; and
  5. a statement as to whether the applicant, or a predecessor in interest, has filed an application to register the mark, or portions or a composite of the mark, with the United States Patent and Trademark Office, and, if so, information regarding that application, including the filing date and serial number, the status of that application, whether that application was refused registration or otherwise did not result in a registration, and, if so, the reasons that application did not result in a registration.

History. (§ 3 ch 84 SLA 1961; am § 1 ch 18 SLA 1977; am § 5 ch 132 SLA 1996; am § 53 ch 65 SLA 1998)

Cross references. —

For legislative intent relating to ch. 132, SLA 1996, see § 1, ch. 132, SLA 1996 in the Temporary and Special Acts.

Sec. 45.50.025. Procedure concerning application.

  1. Upon the filing of an application for registration of a mark and payment of the application fee, the commissioner shall examine the application for conformity with AS 45.50.010 45.50.205 . The commissioner may request additional information, including a description of a design mark, suggest amendments to the application, or suggest that a new application be filed. The applicant may provide the additional information requested, authorize the commissioner to make amendments to the application, or withdraw the application and file a new one to respond to a potential objection or rejection.
  2. As a condition of registration, the commissioner may require the applicant to disclaim an unregistrable component of a mark, or an applicant may voluntarily disclaim a component of a mark originally sought to be registered. A disclaimer under this subsection does not prejudice or affect the rights of an applicant or registrant
    1. in the disclaimed matter that exist at the time of the disclaimer or that arise later; or
    2. to register the disclaimed matter in another application if the disclaimed matter is or becomes distinctive of the applicant’s or registrant’s goods or services.
  3. If an applicant is found not to be entitled to registration of a mark, the commissioner shall notify the applicant and inform the applicant of the reasons for the finding. The commissioner shall give the applicant a reasonable period of time in which to reply or amend the application. If a reply or amendment is delivered to the commissioner within the designated period, the commissioner shall reexamine the application. Before making a final decision, an application may be amended and reexamined as many times as the commissioner determines to be necessary. However, if the applicant fails to reply or amend the application within the period designated by the commissioner, the application is considered abandoned.
  4. When the commissioner makes a final decision on the application, the commissioner shall notify the applicant in writing of the decision and that the decision is final, setting out the reasons for the decision if the application is disapproved. The applicant may appeal the commissioner’s final decision to the superior court. The court may enter judgment setting aside, modifying, remanding, or affirming the decision.
  5. If the commissioner receives more than one application for registration of the same or a confusingly similar mark for the same or related goods or services, the commissioner shall grant the registration to the applicant who first filed the original application if the application otherwise qualifies for registration. A rejected applicant may bring an action in superior court for cancellation of the registration upon the grounds of prior or superior rights to the mark.

History. (§ 6 ch 132 SLA 1996; am § 38 ch 3 SLA 2017)

Cross references. —

For legislative intent relating to ch. 132, SLA 1996, see § 1, ch. 132, SLA 1996 in the Temporary and Special Acts.

Effect of amendments. —

The 2017 amendment, effective July 1, 2017, in (b), in the first sentence, substituted “an unregistrable component” for “an unregisterable component” following “applicant to disclaim”.

Sec. 45.50.030. Form of application.

The application shall be signed by the applicant or by a member of the firm or an officer of the corporation, partnership, or association applying. The application shall be accompanied by three specimens showing the actual use of the mark on or in connection with the goods or services.

History. (§ 3 ch 84 SLA 1961; am § 7 ch 132 SLA 1996; am § 54 ch 65 SLA 1998)

Cross references. —

For legislative intent relating to ch. 132, SLA 1996, see § 1, ch. 132, SLA 1996 in the Temporary and Special Acts.

Sec. 45.50.040. Filing fee.

The application for registration shall be accompanied by a filing fee of $50 payable to the department.

History. (§ 3 ch 84 SLA 1961; am § 2 ch 18 SLA 1977; am § 8 ch 132 SLA 1996)

Cross references. —

For legislative intent relating to ch. 132, SLA 1996, see § 1, ch. 132, SLA 1996 in the Temporary and Special Acts.

Sec. 45.50.050. Form and contents of certificate of registration.

Upon compliance by the applicant with the requirements of AS 45.50.010 45.50.205 , the commissioner shall issue and deliver a certificate of registration to the applicant. The certificate of registration shall be issued under the signature of the commissioner and the seal of the state. The certificate must show

  1. the name and business address of the registrant and, if that registrant is a
    1. corporation, the state of incorporation; or
    2. partnership, the state in which the partnership is organized and the names of the general partners;
  2. the date claimed for the first use of the mark anywhere and the date claimed for the first use of the mark in this state;
  3. the class of goods or services and a description of the goods or services on or in connection with which the mark is used;
  4. a reproduction of the mark;
  5. the registration date; and
  6. the term of the registration.

History. (§ 4 ch 84 SLA 1961; am § 3 ch 18 SLA 1977; am § 9 ch 132 SLA 1996)

Cross references. —

For legislative intent relating to ch. 132, SLA 1996, see § 1, ch. 132, SLA 1996 in the Temporary and Special Acts.

Sec. 45.50.060. Certificate of registration as evidence.

A certificate of registration issued by the commissioner under AS 45.50.010 45.50.205 or a copy of it certified by the commissioner is admissible in evidence as competent and sufficient proof of the registration of the mark in an action or judicial proceeding in the state.

History. (§ 4 ch 84 SLA 1961; am § 4 ch 18 SLA 1977; am § 10 ch 132 SLA 1996)

Cross references. —

For legislative intent relating to ch. 132, SLA 1996, see § 1, ch. 132, SLA 1996 in the Temporary and Special Acts.

Sec. 45.50.070. Duration and renewal.

  1. Registration of a mark is effective for a term of five years from the date of registration. Upon application filed within six months before the expiration of the term in a manner complying with the requirements of the commissioner, the registration may be renewed for an additional term of five years.
  2. An application for renewal of a registration must include a signed statement that the mark has been used and is still in use. Three specimens showing actual use of the mark on or in connection with the goods or services shall be submitted with the renewal application.

History. (§ 5 ch 84 SLA 1961; am § 5 ch 18 SLA 1977; am §§ 11, 12 ch 132 SLA 1996; am § 55 ch 65 SLA 1998)

Cross references. —

For legislative intent relating to ch. 132, SLA 1996, see § 1, ch. 132, SLA 1996 in the Temporary and Special Acts.

Editor’s notes. —

Section 30, ch. 132, SLA 1996 provides that “amendments made to AS 45.50.010 45.50.200 by this Act do not apply to an application, suit, proceeding, or appeal pending on January 1, 1997” and that “[n]otwithstanding the amendments made to AS 45.50.070 45.50.090 in §§ 11-14 of this Act, a registration or renewal of a registration that is in effect on January 1, 1997, remains in effect for the full term that existed on the date of the registration or renewal.”

Sec. 45.50.080. Fee for renewal of registration.

A renewal fee of $50 shall accompany the application for renewal of the registration.

History. (§ 5 ch 84 SLA 1961; am § 13 ch 132 SLA 1996)

Cross references. —

For legislative intent relating to ch. 132, SLA 1996, see § 1, ch. 132, SLA 1996 in the Temporary and Special Acts.

Editor’s notes. —

Section 30, ch. 132, SLA 1996 provides that “amendments made to AS 45.50.010 45.50.200 by this Act do not apply to an application, suit, proceeding, or appeal pending on January 1, 1997” and that “[n]otwithstanding the amendments made to AS 45.50.070 45.50.090 in §§ 11-14 of this Act, a registration or renewal of a registration that is in effect on January 1, 1997 remains in effect for the full term that existed on the date of the registration or renewal.”

Sec. 45.50.090. Additional terms of renewal.

A registration of a mark may be renewed for successive periods of five years in the manner provided in AS 45.50.070 and 45.50.080 .

History. (§ 5 ch 84 SLA 1961; am § 14 ch 132 SLA 1996)

Cross references. —

For legislative intent relating to ch. 132, SLA 1996, see § 1, ch. 132, SLA 1996 in the Temporary and Special Acts.

Editor’s notes. —

Section 30, ch. 132, SLA 1996 provides that “amendments made to AS 45.50.010 45.50.200 by this Act do not apply to an application, suit, proceeding, or appeal pending on January 1, 1997” and that “[n]otwithstanding the amendments made to AS 45.50.070 45.50.090 in §§ 11-14 of this Act, a registration or renewal of a registration that is in effect on January 1, 1997 remains in effect for the full term that existed on the date of the registration or renewal.”

Sec. 45.50.100. Notification of expiration of registration period.

The commissioner shall notify each registrant of the necessity of renewal at least six months preceding the expiration date of the registration. Notification shall be by writing to the last known address of the registrant.

History. (§ 5 ch 84 SLA 1961; am § 6 ch 18 SLA 1977; am § 15 ch 132 SLA 1996)

Cross references. —

For legislative intent relating to ch. 132, SLA 1996, see § 1, ch. 132, SLA 1996 in the Temporary and Special Acts.

Sec. 45.50.110. Registrations existing on July 1, 1961. [Repealed, § 65 ch 37 SLA 1986.]

Sec. 45.50.120. Assignment.

  1. A mark and its registration are assignable with the goodwill of the business in which the mark is used, or with that part of the goodwill of the business connected with the use of and symbolized by the mark.
  2. An assignment shall be in writing and may be filed with the commissioner upon the payment of a fee of $25 to the department. The commissioner shall file the assignment and shall issue in the name of the assignee a new certificate for the remainder of the term of the registration.
  3. An assignment of registration is void as against a subsequent purchaser for valuable consideration without notice, unless it is filed with the commissioner within three months after the date of the assignment or before the subsequent purchase.

History. (§ 6 ch 84 SLA 1961; am § 8 ch 18 SLA 1977; am § 16 ch 132 SLA 1996)

Cross references. —

For legislative intent relating to ch. 132, SLA 1996, see § 1, ch. 132, SLA 1996 in the Temporary and Special Acts.

Sec. 45.50.125. Name change and other filings.

  1. The name of a registrant or applicant may be changed by filing the change of name with the commissioner on a form furnished by the department that has been signed by the registrant or applicant and paying a filing fee of $25. The commissioner shall issue in the changed name of a registrant an amended certificate of registration.
  2. Other signed and verified instruments that relate to a registered mark or an application for registration of a mark may be filed at the discretion of the commissioner upon payment of a filing fee established by regulation of the department.
  3. A photocopy of an instrument shall be accepted by the commissioner for filing if it is certified by a party to the instrument or a successor of a party to be a true and correct copy of the original and if the commissioner would have accepted the original for filing under (a) or (b) of this section.
  4. Acknowledgment is prima facie evidence for the commissioner of the execution of an assignment, change of name, or other instrument related to a registered mark or to registration of a mark. When the instrument is filed by the commissioner, the filing is prima facie evidence of execution of the instrument for all other purposes.

History. (§ 17 ch 132 SLA 1996; am § 56 ch 65 SLA 1998)

Cross references. —

For legislative intent relating to ch. 132, SLA 1996, see § 1, ch. 132, SLA 1996 in the Temporary and Special Acts.

Administrative Code. —

For corporations, partnerships, and other business organizations, see 3 AAC 16.

Sec. 45.50.130. Commissioner to keep record of registration.

The commissioner shall keep for public examination a record of all marks registered or renewed under AS 45.50.010 45.50.205 and a record of all instruments filed under AS 45.50.125 .

History. (§ 7 ch 84 SLA 1961; am § 9 ch 18 SLA 1977; am § 18 ch 132 SLA 1996)

Cross references. —

For legislative intent relating to ch. 132, SLA 1996, see § 1, ch. 132, SLA 1996 in the Temporary and Special Acts.

Sec. 45.50.140. Cancellation.

  1. The commissioner shall cancel in whole or in part
    1. a registration for which the commissioner receives a voluntary written request for cancellation from the registrant or the assignee of record;
    2. each registration that expires and is not renewed under AS 45.50.070 and 45.50.090 ;
    3. a registration found by a court to be
      1. abandoned;
      2. not owned by the registrant;
      3. granted improperly;
      4. obtained fraudulently;
      5. so similar, as to be likely to cause confusion or mistake or to deceive, to a mark registered by another person in the United States Patent and Trademark Office, before the date of filing of the application for registration by the registrant under AS 45.50.010 45.50.205 , and not abandoned; however, if the registrant proves that the registrant is the owner of a concurrent registration of the mark in the United States Patent and Trademark Office covering an area including this state, the registration may not be canceled; or
      6. the generic name for all or a portion of the goods or services for which the mark has been registered;
    4. when a court orders cancellation of a registration on any ground.
  2. For purposes of (a) of this section, registration of a mark is abandoned when use of the mark has been discontinued and the registrant has no intent to resume its use, or when the mark loses its significance as a mark due to action or failure to act by the registrant. The intent not to resume the use of a mark may be inferred from circumstances. No use of a mark by the registrant for at least a 24-month period constitutes prima facie evidence that its registration has been abandoned.

History. (§ 8 ch 84 SLA 1961; am § 10 ch 18 SLA 1977; am §§ 19, 20 ch 132 SLA 1996)

Cross references. —

For legislative intent relating to ch. 132, SLA 1996, see § 1, ch. 132, SLA 1996 in the Temporary and Special Acts.

Collateral references. —

Application of defense of laches in action to cancel trademark, 64 ALR Fed. 2d 255.

Sec. 45.50.150. Classification.

The department shall by regulation establish a classification of goods and services for convenience of administration of AS 45.50.010 45.50.205 . However, the classification does not limit or extend the applicant’s or registrant’s rights, and a single application for registration of a mark may include all goods upon which, or services with which, the mark is actually being used comprised in a single class, but in no event may a single application include goods or services upon which the mark is being used that fall within different classes of goods or services. To the extent practical, the classification of goods and services should conform to the classification adopted by the United States Patent and Trademark Office.

History. (§ 9 ch 84 SLA 1961; am § 21 ch 132 SLA 1996)

Cross references. —

For legislative intent relating to ch. 132, SLA 1996, see § 1, ch. 132, SLA 1996 in the Temporary and Special Acts.

Sec. 45.50.160. Fraudulent registration.

A person who, for the person or on behalf of another, procures the filing or registration of a mark under AS 45.50.010 45.50.205 by knowingly making a false or fraudulent representation or declaration, orally or in writing, or by another fraudulent means, is liable to pay all damages sustained in consequence of the filing or registration, which may be recovered by or on behalf of the party injured in any court.

History. (§ 10 ch 84 SLA 1961; am § 11 ch 18 SLA 1977; am § 22 ch 132 SLA 1996)

Cross references. —

For legislative intent relating to ch. 132, SLA 1996, see § 1, ch. 132, SLA 1996 in the Temporary and Special Acts.

Collateral references. —

Damages recoverable for wrongful registration of trademark, 26 ALR2d 1184.

Sec. 45.50.170. Infringement.

A person is liable in a civil action by the registrant for the remedies provided in AS 45.50.180 if the person

  1. uses, without the consent of the registrant, a reproduction, counterfeit, copy, or colorable imitation of a mark registered under AS 45.50.010 45.50.205 in connection with the sale, distribution, offering for sale, or advertising of goods or services on or in connection with which the use is likely to cause confusion or mistake or to deceive as to the source of origin of the goods or services; or
  2. reproduces, counterfeits, copies, or colorably imitates the mark and applies the reproduction, counterfeit, copy, or colorable imitation to labels, signs, prints, packages, wrappers, receptacles, or advertisements intended to be used upon or in conjunction with the sale or distribution in this state of the goods or services; except that under this paragraph the registrant may not recover profits or damages unless the acts are committed with the intent to cause confusion or mistake or to deceive.

History. (§ 11 ch 84 SLA 1961; am § 23 ch 132 SLA 1996)

Cross references. —

For legislative intent relating to ch. 132, SLA 1996, see § 1, ch. 132, SLA 1996 in the Temporary and Special Acts.

Collateral references. —

87 C.J.S. Trademarks, etc. § 80 et seq.

Worldwide web domain as violating state trademark protection statute or state unfair trade practices act, 96 ALR5th 1.

Application of doctrine of “reverse passing off” under Lanham Act, 194 ALR Fed. 175.

Lanham Act trademark infringement actions in internet and website context, 197 ALR Fed. 17.

Sec. 45.50.180. Remedies.

  1. A registrant may enjoin the manufacture, use, display, or sale of a counterfeit or imitation of the registrant’s mark.
  2. The court may grant an injunction to restrain the manufacture, use, display, or sale, and may require the defendant to pay to the registrant either the profits derived from or the damages suffered by reason of the wrongful manufacture, use, display, or sale, or both. The court may also order that the counterfeit or imitation in the possession or under the control of a defendant be delivered to an officer of the court, or to the complainant, to be destroyed. The court may also enter judgment for punitive damages in an amount not to exceed three times the profits and damages.
  3. [Repealed, § 29 ch 132 SLA 1996.]
  4. A registrant that owns a mark that is famous in the state is entitled to an injunction against another’s dilution of the mark. If the user of the famous mark wilfully intended to trade on the registrant’s reputation or to cause dilution of the mark, the registrant is also entitled to remedies set out in (b) of this section. In determining whether a mark is famous, a court may consider any factor, including the
    1. degree of inherent or acquired distinctiveness of the mark in the state;
    2. duration and extent of use of the mark in connection with the goods and services;
    3. duration and extent of advertising and publicity of the mark in the state;
    4. geographical extent of the trading area in which the mark is used;
    5. channels of trade for the goods or services with which the mark is used;
    6. degree of recognition in the state of the mark in the registrant’s trading area and channel of trade, and in the user’s trading area and channel of trade; and
    7. nature and extent of use of the same or similar mark by other persons.
  5. For purposes of (d) of this section, “dilution” means the use of a word, symbol, or device, or a combination of one or more of these, in a manner that deprives or reduces the distinctiveness of a mark.

History. (§ 12 ch 84 SLA 1961; am §§ 24 — 26, 29 ch 132 SLA 1996)

Cross references. —

For legislative intent relating to ch. 132, SLA 1996, see § 1, ch. 132, SLA 1996 in the Temporary and Special Acts.

Collateral references. —

87 C.J.S. Trademarks, etc. § 227 et seq.

Protection of business or trading corporation against use of same or similar name by another corporation, 72 ALR3d 8.

Corporation’s right to prevent use of its name by another corporation where they do business in different localities, 72 ALR3d 8.

Sec. 45.50.190. Common-law rights. [Repealed, § 29 ch 132 SLA 1996.]

Sec. 45.50.200. Definitions.

In AS 45.50.010 45.50.205 ,

  1. “applicant” means the person filing an application for registration of a mark, or a legal representative, successor, or assign of that person;
  2. “certification mark” means a mark used upon or in connection with the goods or services of one or more persons other than the registrant to certify national or other origin, material, mode of manufacture, quality, accuracy, or other characteristics of the goods or services or that the work or labor on the goods or services was performed by members of a union or other organization;
  3. “collective mark” means a trademark or service mark used by the members of a cooperative, an association, or other collective group or organization and includes marks used to indicate membership in a union, an association, or other organization;
  4. “commissioner” means the commissioner of commerce, community, and economic development;
  5. “department” means the Department of Commerce, Community, and Economic Development;
  6. “mark” means a certification mark, a collective mark, a service mark, or a trademark;
  7. “registrant” means the person to whom the registration of a mark is issued, or a legal representative, successor, or assign of that person;
  8. “service mark” means a word, symbol, design, or a combination of one or more of these that identifies the services of a person;
  9. “trademark” means a word, symbol, or design, or a combination of one or more of these, used by a person to identify its goods and distinguish them from those of another;
  10. “use” or “used” means the bona fide use of a mark in the ordinary course of trade, and not made merely to reserve a right in the mark; a mark is considered to be in use on goods when it is placed in any manner on the goods, on the goods’ container, on tags or labels affixed to the goods, on displays associated with the goods, or, if the nature of the goods makes other types of placement impracticable, on documents associated with the goods or with the sale of the goods when they are sold or transported in commerce in this state; a mark is considered to be in use on services when it is displayed in the sale or advertising of services that are performed in this state;
  11. “verified” means that a document has been certified to be true as provided in AS 09.63.040 .

History. (§ 1 ch 84 SLA 1961; am § 12 ch 18 SLA 1977; am § 27 ch 132 SLA 1996)

Revisor’s notes. —

Reorganized in 1986 to alphabetize the defined terms.

In 1999, in this section, “commissioner of commerce and economic development” was changed to “commissioner of community and economic development” and “Department of Commerce and Economic Development” was changed to “Department of Community and Economic Development” in accordance with § 88, ch. 58, SLA 1999.

In 2004, “commissioner of community and economic development” was changed to “commissioner of commerce, community, and economic development” and “Department of Community and Economic Development” was changed to “Department of Commerce, Community, and Economic Development”, in accordance with § 3, ch. 47, SLA 2004.

Cross references. —

For legislative intent relating to ch. 132, SLA 1996, see § 1, ch. 132, SLA 1996 in the Temporary and Special Acts.

Collateral references. —

What constitutes “famous mark” for purposes of federal Trademark Dilution Act, 15 U.S.C. § 1125(c), which provides remedies for dilution of famous marks, 165 ALR Fed. 625.

Sec. 45.50.205. Short title.

AS 45.50.010 45.50.205 may be cited as the Alaska Trademark Act.

History. (§ 28 ch 132 SLA 1996)

Administrative Code. —

For corporations, partnerships, and other business organizations, see 3 AAC 16.

Article 2. Log Brands.

Sec. 45.50.210. Application for registration of distinctive brand.

  1. The owner of timber property that the owner puts or intends to put into a coastal water, lake, river, creek, or other waterway of the state for the purpose of rafting or transporting by floating or towing, shall apply to the department for the exclusive use of a distinctive brand to identify it.
  2. The application shall be in writing and accompanied by an acceptable diagram or design on paper of the proposed brand, and the prescribed fee.
  3. The department shall promptly register the brand and issue a certificate of registration to the applicant granting the applicant the exclusive use of the brand for a period of five years.  The department may not register a brand that is so similar in design to one presently registered in the name of another person that one brand is not clearly distinguishable from the other.

History. (§ 1 ch 51 SLA 1953; am § 1 ch 191 SLA 1955; am § 1 ch 168 SLA 1970; am § 1 ch 68 SLA 1975)

Administrative Code. —

For log brands, see 11 AAC 71, art. 5.

Sec. 45.50.220. Termination and renewal.

The right to the exclusive use of a registered brand ceases at the end of five years from the date of registration. The brand may be renewed by application before expiration, together with the payment of the prescribed fee. Renewals may be made successively for five-year terms.

History. (§ 2 ch 51 SLA 1953; am § 2 ch 168 SLA 1970; am § 2 ch 68 SLA 1975)

Administrative Code. —

For log brands, see 11 AAC 71, art. 5.

Sec. 45.50.230. Presumption from display.

  1. Each piece of timber property put or intended to be put in a coastal water, lake, river, creek, or other waterway of the state for the purpose of rafting or transporting by floating or towing shall display upon at least one end the registered brand and is presumed
    1. while in the possession and control of the person in whose name the brand is registered, to be the sole property of that person; and
    2. to be “abandoned property” if, 30 days after the time public notice has expired as provided under AS 45.50.234 or 90 days from the date of reporting required under AS 45.50.232 or from the date of expiration of any extended recovery period under AS 45.50.237 , it is not in the possession and control of the owner or rightful transporter and is
      1. adrift in the water of the state,
      2. stranded on the beaches, marshes, tideland, or shoreland of the water of the state, or
      3. partially or wholly submerged in the water of the state.
  2. [Repealed, § 7 ch 232 SLA 1976.]

History. (§ 3 ch 51 SLA 1953; am § 2 ch 191 SLA 1955; am § 3 ch 168 SLA 1970; am §§ 1, 7 ch 232 SLA 1976)

Administrative Code. —

For log brands, see 11 AAC 71, art. 5.

Sec. 45.50.232. Reporting of lost logs to the department.

The owner or rightful transporter of timber property not in the possession or control of the owner or transporter, which has become adrift in the waters of the state, stranded on the beaches, marshes, tideland, or shoreland of the water of the state, or partially or wholly submerged in the water of the state, shall report the loss of the timber property within 15 days from the time the loss is discovered to the department, indicating the probable date lost, the place lost, if known, the probable area of recovery, and any other information that the department may require. Unless the time for recovery is extended under AS 45.50.237 , the rightful transporter or owner of timber property has 90 days from the date the loss is reported to recover the timber property. After 90 days from the date of reporting or upon the expiration of any extension granted under AS 45.50.237 , the timber property is considered to be abandoned, notice is not required to be published under AS 45.50.234 , and the timber property is presumed to be the property of the state.

History. (§ 2 ch 232 SLA 1976)

Sec. 45.50.234. Publication of notice of intent to claim abandoned property.

Except as provided in AS 45.50.232 , the department shall publish notice of its intent to claim abandoned timber property under AS 45.50.210 45.50.325 for not less than 30 days from the date that first notice is published under this section. Notice shall be published once a week for at least three consecutive weeks in a newspaper of general circulation nearest the area where the timber property is located and, if feasible, posted in a centrally located public place within or in close proximity to the area where the timber property is located.

History. (§ 2 ch 232 SLA 1976)

Sec. 45.50.235. Ownership of unbranded and abandoned timber property.

  1. Timber property that is unbranded or on which a brand is not distinguishable and that is located in a coastal water, lake, river, creek, or other waterway of the state or on state owned coastline is presumed to be the property of the state. Timber property that is abandoned property as defined in AS 45.50.230(a)(2) is presumed to be the property of the state 90 days after the period of reporting as required in AS 45.50.232 unless an extension has been granted, or 30 days after the period of notice has expired as provided under AS 45.50.234 .
  2. Timber property that becomes state property under the provisions of this section may be sold under terms and conditions established by the director of the division of lands.

History. (§ 4 ch 168 SLA 1970; am § 3 ch 68 SLA 1975; am § 3 ch 232 SLA 1976; am § 5 ch 73 SLA 1978)

Administrative Code. —

For unbranded or abandoned timber property sales, see 11 AAC 71, art. 4.

Sec. 45.50.237. Extension of period for recovery of timber property.

The department shall extend the 90-day period for recovery of timber property after reporting specified in AS 45.50.232 if a good faith effort to salvage the timber property is being made by the person requesting the extension. Extensions shall be granted for limited periods only but may be continued until salvage is completed, and guidelines shall be established specifying what constitutes a good faith effort for purposes of extension under regulations adopted by the department. Definition of a good faith effort must include the specification of extraordinary circumstances of weather and tide conditions that may preclude direct and immediate salvage operations.

History. (§ 4 ch 232 SLA 1976)

Sec. 45.50.240. Property rights in brand.

Each registered brand is the property of the person in whose name it is registered. It is personal property and may be sold, hypothecated, assigned, or otherwise transferred.

History. (§ 4 ch 51 SLA 1953; am § 5 ch 168 SLA 1970)

Sec. 45.50.250. Recording brand.

The commissioner shall file for record in the department files a true copy of each certificate of registration issued.

History. (§ 5 ch 51 SLA 1953; am § 6 ch 168 SLA 1970; am § 4 ch 68 SLA 1975)

Sec. 45.50.260. Registration upon transfer.

If a transfer of a brand is made, including transfer by assignment or sale, a true copy of the transfer instrument shall be filed for record with the department. The fee for transfer is as specified by regulation.

History. (§ 5 ch 51 SLA 1953; am § 7 ch 168 SLA 1970; am § 5 ch 68 SLA 1975)

Administrative Code. —

For log brands, see 11 AAC 71, art. 5.

Sec. 45.50.270. Publication of current list of brands.

The department shall publish a list of brands as of December 31 of each even numbered year. The list must show the design of each brand, the name and address of the owner, the date of registration, and any transfer of a brand during the previous two years. Copies of the list shall be available to the public upon request.

History. (§ 6 ch 51 SLA 1953; am § 8 ch 168 SLA 1970; am § 6 ch 68 SLA 1975)

Sec. 45.50.280. Certified copies of certificate or transfer instrument.

Upon request and payment of the prescribed fee, the department shall furnish a certified copy of a brand certificate of registration or a certified copy of the instrument of transfer of a brand.

History. (§ 8 ch 51 SLA 1953; am § 9 ch 168 SLA 1970; am § 7 ch 68 SLA 1975)

Sec. 45.50.290. Certificate of registration as evidence.

A certificate of registration of a brand or a certified copy of the certificate or of the instrument of transfer of a registered brand is prima facie evidence of the ownership of the timber property impressed with or displaying the registered brand.

History. (§ 8 ch 51 SLA 1953; am § 10 ch 168 SLA 1970; am § 8 ch 68 SLA 1975)

Sec. 45.50.300. Registration as constructive notice.

Registration by the department and filing for record in the department files of a true copy of the certificate of registration or the transfer instrument is constructive notice of the ownership of the brand.

History. (§ 8 ch 51 SLA 1953; am § 11 ch 168 SLA 1970; am § 9 ch 68 SLA 1975)

Sec. 45.50.310. Disposition of fees.

Fees collected under AS 45.50.210 45.50.325 by the department shall be deposited in the general fund of the state.

History. (§ 9 ch 51 SLA 1953; am § 12 ch 168 SLA 1970)

Sec. 45.50.315. Regulations.

The department may adopt regulations necessary to implement AS 45.50.210 45.50.325 .

History. (§ 13 ch 168 SLA 1970)

Administrative Code. —

For fees for department services, see 11 AAC 5.

For unbranded or abandoned timber property sales, see 11 AAC 71, art. 4.

For log brands, see 11 AAC 71, art. 5.

Sec. 45.50.320. Penalties for fraudulent branding or other acts.

A person who fraudulently brands timber property with a brand which the person knows or has reasonable cause to know is the registered brand of another person, or who knowingly alters, defaces, obliterates, or destroys a registered brand impressed or displayed upon timber property, or who knowingly sells or disposes of, or attempts to sell or dispose of, or to convert or appropriate to the person’s own use, without the written consent of the owner, timber property impressed with or displaying upon it a registered brand of another person, is guilty of a misdemeanor and upon conviction is punishable by a fine of not more than $1,000, or by imprisonment in jail for not more than six months, or by both.

History. (§ 7 ch 51 SLA 1953; am § 14 ch 168 SLA 1970; am § 61 ch 32 SLA 1971)

Administrative Code. —

For log brands, see 11 AAC 71, art. 5.

Sec. 45.50.325. Definitions.

In AS 45.50.210 45.50.325 ,

  1. “brand” includes a mark or other designation that has been registered with the department;
  2. “commissioner” means the commissioner of natural resources;
  3. “department” means the Department of Natural Resources;
  4. “rightful transporter” means a person who has an executory contract interest in the timber property the person is transporting, or that person’s designee, or one who, in the normal usage of the trade, transports, or aids in the transportation of, timber property for the benefit of and authorized by the owner of the timber property;
  5. “timber property” means logs, pilings, poles, other timbers, boom sticks, and boom chains.

History. (§ 15 ch 168 SLA 1970; am § 10 ch 68 SLA 1975; am § 5 ch 232 SLA 1976)

Revisor’s notes. —

Reorganized in 1986 to alphabetize the defined terms.

Administrative Code. —

For log brands, see 11 AAC 71, art. 5.

Secs. 45.50.330 — 45.50.460. Pooled music copyright law. [Repealed, § 1 ch 95 SLA 1984.]

Article 3. Unfair Trade Practices and Consumer Protection.

Cross references. —

For a temporary provision in effect March 11, 2020, to March 11, 2021, identifying as an unfair or deceptive act or practice the charging of more than 10 percent over the price charged for supplies in this state in the normal course of business before March 11, 2020, see § 26, ch. 10, SLA 2020 in the 2020 Temporary and Special Acts.

Administrative Code. —

For retail advertising, see 9 AAC 05.

Notes to Decisions

Constitutionality. —

Absent a history or strong likelihood of uneven application, this article cannot be said to be unconstitutionally vague. State v. O'Neill Investigations, 609 P.2d 520 (Alaska 1980).

Any defects in the constitutional sufficiency of the warning provided by this article is cured by authoritative administrative interpretations of the Federal Trade Commission which clarify obscurities or resolve ambiguities. State v. O'Neill Investigations, 609 P.2d 520 (Alaska 1980).

Article not applicable to sale of real property. —

This article does not apply at all to the sale of real property; rather, the entire thrust of this article is directed at regulating practices relating to transactions involving consumer goods and services. State v. First Nat'l Bank, 660 P.2d 406 (Alaska 1982).

Liberal construction. —

The provisions of this article should not be strictly construed, for it is basic that remedial civil statutes are to be accorded a liberal construction. State v. O'Neill Investigations, 609 P.2d 520 (Alaska 1980).

The act is remedial, and therefore its provisions are to be liberally construed. State v. First Nat'l Bank, 660 P.2d 406 (Alaska 1982).

This article, as applied, is not a penal statute. State v. O'Neill Investigations, 609 P.2d 520 (Alaska 1980).

This article embraces independent debt collection practices. State v. O'Neill Investigations, 609 P.2d 520 (Alaska 1980).

The exemption clause of AS 45.50.481(a)(1) does not withdraw the activities of independent debt collection agencies from the scope of the Unfair Trade Practices and Consumer Protection Act. State v. O'Neill Investigations, 609 P.2d 520 (Alaska 1980).

Cited in

Vertecs Corp. v. Reichhold Chems., 671 P.2d 1273 (Alaska 1983); Shooshanian v. Wagner, 672 P.2d 455 (Alaska 1983).

Collateral references. —

When statute of limitations commences to run on on action under state deceptive trade practice or consumer protection acts, 18 ALR4th 1340.

Sec. 45.50.470. [Repealed, § 1 ch 246 SLA 1970.]

Sec. 45.50.471. Unlawful acts and practices.

  1. Unfair methods of competition and unfair or deceptive acts or practices in the conduct of trade or commerce are declared to be unlawful.
  2. The terms “unfair methods of competition” and “unfair or deceptive acts or practices” include the following acts:
    1. fraudulently conveying or transferring goods or services by representing them to be those of another;
    2. falsely representing or designating the geographic origin of goods or services;
    3. causing a likelihood of confusion or misunderstanding as to the source, sponsorship, or approval, or another person’s affiliation, connection, or association with or certification of goods or services;
    4. representing that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities that they do not have or that a person has a sponsorship, approval, status, affiliation, or connection that the person does not have;
    5. representing that goods are original or new if they are deteriorated, altered, reconditioned, reclaimed, used, secondhand, or seconds;
    6. representing that goods or services are of a particular standard, quality, or grade, or that goods are of a particular style or model, if they are of another;
    7. disparaging the goods, services, or business of another by false or misleading representation of fact;
    8. advertising goods or services with intent not to sell them as advertised;
    9. advertising goods or services with intent not to supply reasonable expectable public demand, unless the advertisement prominently discloses a limitation of quantity;
    10. making false or misleading statements of fact concerning the reasons for, existence of, or amounts of price reductions;
    11. engaging in any other conduct creating a likelihood of confusion or of misunderstanding and that misleads, deceives, or damages a buyer or a competitor in connection with the sale or advertisement of goods or services;
    12. using or employing deception, fraud, false pretense, false promise, misrepresentation, or knowingly concealing, suppressing, or omitting a material fact with intent that others rely upon the concealment, suppression, or omission in connection with the sale or advertisement of goods or services whether or not a person has in fact been misled, deceived, or damaged;
    13. failing to deliver to the customer at the time of an installment sale of goods or services, a written order, contract, or receipt setting out the name and address of the seller and the name and address of the organization that the seller represents, and all of the terms and conditions of the sale, including a description of the goods or services, which must be stated in readable, clear, and unambiguous language;
    14. representing that an agreement confers or involves rights, remedies, or obligations that it does not confer or involve, or that are prohibited by law;
    15. knowingly making false or misleading statements concerning the need for parts, replacement, or repair service;
    16. misrepresenting the authority of a salesman, representative, or agent to negotiate the final terms of a consumer transaction;
    17. basing a charge for repair in whole or in part on a guaranty or warranty rather than on the actual value of the actual repairs made or work to be performed on the item without stating separately the charges for the work and the charge for the guaranty or warranty, if any;
    18. disconnecting, turning back, or resetting the odometer of a vehicle to reduce the number of miles indicated;
    19. using a chain referral sales plan by inducing or attempting to induce a consumer to enter into a contract by offering a rebate, discount, commission, or other consideration, contingent upon the happening of a future event, on the condition that the consumer either sells, or gives information or assistance for the purpose of leading to a sale by the seller of the same or related goods;
    20. selling or offering to sell a right of participation in a chain distributor scheme;
    21. selling, falsely representing, or advertising meat, fish, or poultry that has been frozen as fresh food;
    22. failing to comply with AS 45.02.350 ;
    23. failing to comply with AS 45.45.130 45.45.240 ;
    24. counseling, consulting, or arranging for future services relating to the disposition of a body upon death whereby certain personal property, not including cemetery lots and markers, will be furnished or the professional services of a funeral director or embalmer will be furnished, unless the person receiving money or property deposits the money or property, and money or property is received, within five days of its receipt, in a trust in a financial institution whose deposits are insured by an instrumentality of the federal government designating the institution as the trustee as a separate trust in the name only of the person on whose behalf the arrangements are made with a provision that the money or property may only be applied to the purchase of designated merchandise or services and should the money or property deposited and any accrued interest not be used for the purposes intended on the death of the person on whose behalf the arrangements are made, all money or property in the trust shall become part of that person’s estate; upon demand by the person on whose behalf the arrangements are made, all money or property in the trust, including accrued interest, shall be paid to that person; this paragraph does not prohibit the charging of a separate fee for consultation, counseling, or arrangement services if the fee is disclosed to the person making the arrangement; any arrangement under this paragraph that would constitute a contract of insurance under AS 21 is subject to the provisions of AS 21;
    25. failing to comply with the terms of AS 45.50.800 45.50.850 (Alaska Gasoline Products Leasing Act);
    26. failing to comply with AS 45.30 relating to mobile home warranties and mobile home parks;
    27. failing to comply with AS 14.48.060(b)(13) ;
    28. dealing in hearing aids and failing to comply with AS 08.55;
    29. violating AS 45.45.910(a) , (b), or (c);
    30. failing to comply with AS 45.50.473 ;
    31. violating the provisions of AS 45.45.400 ;
    32. knowingly selling a reproduction of a piece of art or handicraft that was made by a resident of the state unless the reproduction is clearly labeled as a reproduction; in this paragraph, “reproduction” means a copy of an original if the copy is
      1. substantially the same as the original; and
      2. not made by the person who made the original;
    33. violating AS 08.66 (motor vehicle dealers);
    34. violating AS 08.66.260 08.66.350 (motor vehicle buyers” agents);
    35. violating AS 45.63 (solicitations by telephonic means);
    36. violating AS 45.68 (charitable solicitations);
    37. violating AS 45.50.474 (on board promotions);
    38. referring a person to a dentist or a dental practice that has paid or will pay a fee for the referral unless the person making the referral discloses at the time the referral is made that the dentist or dental practice has paid or will pay a fee based on the referral;
    39. advertising that a person can receive a referral to a dentist or a dental practice without disclosing in the advertising that the dentist or dental practice to which the person is referred has paid or will pay a fee based on the referral if, in fact, the dentist or dental practice to which the person is referred has paid or will pay a fee based on the referral;
    40. violating AS 45.50.477(a) — (c);
    41. failing to comply with AS 45.50.475 ;
    42. violating AS 45.35 (lease-purchase agreements);
    43. violating AS 45.25.400 45.25.590 (motor vehicle dealer practices);
    44. violating AS 45.66 (sale of business opportunities);
    45. violating AS 08.18.023(b) or 08.18.152 ;
    46. violating AS 45.50.479 (limitations on electronic mail);
    47. violating AS 17.06.010 (sale of, or offering to sell, organic food);
    48. violating a labeling or advertising provision of AS 17.20 (Alaska Food, Drug, and Cosmetic Act);
    49. violating AS 45.45.920 (free trial period);
    50. violating AS 45.45.930 (opt-out marketing plans);
    51. violating AS 45.45.792 (deceptive acts or practices relating to spyware);
    52. violating AS 06.60.340 (mortgage lending regulation);
    53. offering a check, through the mail or by other means, to promote goods or services, if the cashing or deposit of the check obligates the endorser or payee identified on the check to pay for goods or services; in this paragraph, “services” does not include the extension of credit or the lending of money;
    54. violating AS 45.65.055 (authentic Alaska Native art identification seals);
    55. an information collector, other than a governmental agency, violating AS 45.48.010 45.48.090 (breach of security involving personal information); in this paragraph,
      1. “governmental agency” has the meaning given in AS 45.48.090 ;
      2. “information collector” has the meaning given in AS 45.48.090;
    56. violating AS 45.27 (marine products and motorized recreational products);
    57. violating AS 45.45.450 45.45.459 (rental car fees).
  3. The unlawful acts and practices listed in (b) of this section are in addition to and do not limit the types of unlawful acts and practices actionable at common law or under other state statutes.
  4. [Repealed, § 21 ch 166 SLA 1978.]

History. (§ 2 ch 246 SLA 1970; am § 1 ch 53 SLA 1974; am § 1 ch 138 SLA 1974; am § 1 ch 183 SLA 1975; am § 2 ch 146 SLA 1976; am § 3 ch 197 SLA 1976; am § 3 ch 234 SLA 1976; am § 21 ch 166 SLA 1978; am § 12 ch 131 SLA 1986; am § 2 ch 59 SLA 1990; am § 3 ch 82 SLA 1990; am § 1 ch 92 SLA 1992; am § 2 ch 118 SLA 1992; am § 6 ch 10 SLA 1993; am § 3 ch 60 SLA 1993; am § 4 ch 109 SLA 1994; am § 2 ch 22 SLA 1995; am § 1 ch 69 SLA 1995; am § 3 ch 142 SLA 1996; am § 3 ch 10 SLA 1999; am §§ 10, 11 ch 79 SLA 2002; am § 2 ch 128 SLA 2002; am § 1 ch 14 SLA 2003; am § 40 ch 134 SLA 2003; am § 1 ch 55 SLA 2004; am § 2 ch 57 SLA 2004; am § 13 ch 151 SLA 2004; am § 4 ch 97 SLA 2005; am § 8 ch 50 SLA 2007; am § 1 ch 14 SLA 2008; am § 2 ch 16 SLA 2008; am § 5 ch 92 SLA 2008; am § 4 ch 28 SLA 2009; am § 61 ch 41 SLA 2009; am § 3 ch 50 SLA 2010; am § 86 ch 61 SLA 2010; am § 39 ch 3 SLA 2017)

Revisor’s notes. —

Paragraph (b)(24) was enacted as (b)(23) and paragraph (b)(25) was enacted as (b)(22); renumbered in 1976. Paragraph (b)(28) was enacted as (b)(27); renumbered in 1986. Paragraphs (b)(24) and (25) were enacted as (b)(23) and (b)(22), respectively; renumbered in 1976. Paragraph (b)(28) was enacted as (b)(27); renumbered in 1986. Paragraph (b)(30) was enacted as (b)(29); renumbered in 1990. Paragraph (b)(32) was enacted as (b)(31); renumbered in 1992, at which time “AS 45.45.400 ” was substituted for “AS 45.45.410” to correct a manifest error in § 2, ch. 118, SLA 1992. Paragraphs (b)(35) and (36) were enacted as (b)(33) and (34), respectively; renumbered in 1993. Paragraph (b)(40) was enacted as (b)(38); renumbered in 1995. Paragraph (b)(44) was enacted as (b)(43); renumbered in 2002. Paragraph (b)(46) was enacted as (b)(45); renumbered in 2003. Paragraphs (b)(49) and (50) were enacted as (b)(47) and (48) and renumbered in 2004. Paragraph (b)(54) was enacted as (b)(53) and renumbered in 2008. Paragraph (b)(55) was enacted as (b)(53) and renumbered in 2008.

In paragraph (b)(57) of this section, “AS 45.45.450 45.45.459 ” was substituted for “AS 45.45.450 — 45.45.470” to conform to the 2010 renumbering of those sections.

Administrative Code. —

For retail advertising, see 9 AAC 5.

Effect of amendments. —

The first 2009 amendment, effective May 26, 2009, added paragraph (b)(56).

The second 2009 amendment, effective June 21, 2009, in (b)(34), substituted “AS 08.66.260 08.66.350 ” for “AS 08.66.200 — 08.66.350 ”.

The first 2010 amendment, effective July 1, 2010, in (b)(52), substituted “AS 06.60.340 ” for “AS 06.60.010 06.60.380 ”.

The second 2010 amendment, effective September 5, 2010, added (b)(57).

The 2017 amendment, effective July 1, 2017, in (b), in the introductory language, deleted “, but are not limited to,” near the end, in (b)(11), (14), (21), and (24) substituted “that” for “which”, in (b)(13) substituted “must” for “shall”.

Editor’s notes. —

Section 4, ch. 10, SLA 1999 provides that ch. 10, SLA 1999, which added (b)(42) to this section, “does not apply to a lease-purchase agreement unless the lease-purchase agreement is entered into on or after August 4, 1999.” For purposes of this statement of applicability, § 4 also provides that “lease-purchase agreement” has the meaning given in AS 45.35.099 .

Section 15, ch. 79, SLA 2002, provides that paragraph (b)(43) and the amendment to (b)(33) apply to a franchise that is entered into on or after July 1, 2002.

Sec. 1, ch. 61, SLA 2010, provides that “it is the intent of the legislature that the amendment [of paragraph (b)(52)] not affect the right of a person to bring an action under AS 45.50.471 45.50.561 for a violation of AS 06.60.340 , as amended by § 48 [, ch. 61, SLA 2010], for conduct that is also described under another provision of AS 06.60.320 06.60.380 .”

Legislative history reports. —

For report on ch. 246, SLA 1970 (FCCS 2d HCS CSSB 352), see 1970 House Journal Supplement 10, following p. 743 of the 1970 House Journal; for report of the conference committee, see either 1970 House Journal, p. 1546, or 1970 Senate Journal, p. 1296.

Notes to Decisions

This statute did not chill constitutionally protected speech, where the speech in question involved communications regarding alleged debts and thus fell within the rubric of commercial speech, which enjoys a lesser first amendment protection than noncommercial speech. State v. O'Neill Investigations, 609 P.2d 520 (Alaska 1980).

Subsection (a) not vague. —

The words of subsection (a) of this section have a “well-defined” meaning in the area of trade regulation and are therefore not vague. State v. O'Neill Investigations, 609 P.2d 520 (Alaska 1980).

When act or practice is deceptive or unfair. —

Owner's misrepresentation in an FED action that he personally owned the mobile home did not accomplish a fraudulent conveyance or transfer, and therefore did not violate AS 45.50.471(b)(1) . Cozzetti v. Madrid, — P.3d — (Alaska Dec. 13, 2017).

Owner's initial misrepresentation on a contract indicating another entity as the owner of a mobile home fell outside of the scope of AS 45.50.471(b)(1) where there was no indication that the initial misrepresentation had any impact on the purchaser's decision to purchase the mobile home, nor did the purchaser claim that it did. Cozzetti v. Madrid, — P.3d — (Alaska Dec. 13, 2017) (memorandum decision).

Superior court properly found that a mobile homeowner violated AS 45.50.471(b)(11) and (12) by representing in his original FED action that the purchaser was merely a renter where the misrepresentation damaged the purchaser by leading the district court to improperly grant judgment against him without jurisdiction and without acknowledging his rights as a purchaser. Cozzetti v. Madrid, — P.3d — (Alaska Dec. 13, 2017).

Claim pled with required particularity. —

Plaintiff's Alaska Unfair Trade Practices and Consumer Protection Act (UTPCPA) claim was based on allegations that defendants' representations were “deceptive and false:” that defendants were intentionally misrepresenting that the tax being charged consumers in Alaska such as plaintiff was proper. Her UTPCPA claim was based on allegations that defendants made fraudulent misrepresentations and thus was grounded in fraud; her allegations in the second amended complaint were specific enough to put defendants on notice as to the misconduct which she alleged violated the UTPCPA. Van v. LLR, Inc., 500 F. Supp. 3d 927 (D. Alaska 2020).

Claim not well pled. —

Superior court's decision that the bank had not violated the Alaska Unfair Trade Practices and Consumer Protection Act (UTPA) was affirmed as his claim rested on the principle that a violation of the FDCPA was also a violation of the UTPA, and the bank was not a debt collector under the FDCPA, and thus, it had been granted summary judgment on that claim. Wendt v. Bank of N.Y. Mellon Trust Co., N.A., 487 P.3d 235 (Alaska 2021).

Generally. —

Supreme Court of Alaska agrees that the phrase "in connection with," as used in AS 45.50.471(b)(11) and (12), should include post-sale conduct that is related to the sale. Cozzetti v. Madrid, — P.3d — (Alaska Dec. 13, 2017) (memorandum decision).

Two elements must be proved to establish a prima facie case of unfair or deceptive acts or practices under the act: (1) that the defendant is engaged in trade or commerce; and (2) that in the conduct of trade or commerce, an unfair act or practice has occurred. State v. O'Neill Investigations, 609 P.2d 520 (Alaska 1980).

In a consumer protection action, a prima facie case is presented when the plaintiff establishes that the defendant engaged in trade or commerce and in the course of that business committed an unfair act or practice. State v. Grogan, 628 P.2d 570 (Alaska 1981).

Debtor who transferred $200,000 he received from a creditor to a leveraged investment platform instead of keeping his promise to place the funds in escrow so he could obtain financing on a construction project did not violate the Alaska Unfair Trade Practices and Consumer Protection Act, AS 45.50.471 45.50.561 , or the Alaska Securities Act, AS 45.55.010 — 45.55.995. He was not engaged in selling goods in trade or commerce and he did not sell securities; however, the debt the debtor owed the creditor was nondischargeable under 11 U.S.C.S. § 523 because he knowingly breached his promise to place the funds in escrow. Keeton v. Flanagan (In re Flanagan), — B.R. — (B.A.P. 9th Cir. Feb. 26, 2014), aff'd, 642 Fed. Appx. 784 (9th Cir. 2016).

Intra-corporate acts. —

Although a claim involved intra-corporate acts, Alaska’s Unfair Trade Practices Act was not inapplicable as a matter of law because the parties also had engaged in arms-length transactions. Alaska Interstate Constr., LLC v. Pac. Diversified Invs., 279 P.3d 1156 (Alaska 2012).

When act or practice is deceptive or unfair. —

An act or practice is deceptive or unfair if it has the capacity or tendency to deceive. State v. O'Neill Investigations, 609 P.2d 520 (Alaska 1980).

Debtor's fraudulent misrepresentations that gave rise to his nondischargeable debt also constituted an unfair act or practice that occurred in the conduct of trade of commerce for purposes of the statute where the debtor had the requisite intent for a fraudulent misrepresentation when he omitted material facts such as the small business's financial condition, and the current status of his relationships with both the borrower and lender. Deloycheet, Inc. v. Beach (In re Beach), — B.R. — (Bankr. D. Alaska Apr. 7, 2017).

Actual injury as a result of the deception is not required. State v. O'Neill Investigations, 609 P.2d 520 (Alaska 1980).

Intent to deceive need not be proved. State v. O'Neill Investigations, 609 P.2d 520 (Alaska 1980).

Good faith no defense to material misrepresentation. —

Consumer purchased a motor home represented by the dealer as being one model year newer than it was. Under this section it was not necessary for the consumer to show that this misrepresentation was knowing or made in bad faith, only that it was a material misrepresentation. Borgen v. A&M Motors, Inc., 273 P.3d 575 (Alaska 2012).

Testimony of consumers that they were misled is sufficient to sustain a prima facie case of unfair and deceptive practices. State v. O'Neill Investigations, 609 P.2d 520 (Alaska 1980).

An act or practice need not be deceptive to be unfair. State v. O'Neill Investigations, 609 P.2d 520 (Alaska 1980).

Unfairness will be determined by a variety of factors, including: (1) whether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise — whether, in other words, it is within at least the penumbra of some common law, statutory, or other established concept of unfairness; (2) whether it is immoral, unethical, oppressive, or unscrupulous; and (3) whether it causes substantial injury to consumers, competitors or other businessmen. State v. O'Neill Investigations, 609 P.2d 520 (Alaska 1980).

Similarity to federal law. —

The prohibition in this section against “unfair methods of competition and unfair or deceptive acts or practices in the conduct of trade or commerce” is substantially similar to that contained in section 5(a)(1) of the Federal Trade Commission Act, 15 U.S.C. § 45(a)(1). Matanuska Maid v. State, 620 P.2d 182 (Alaska 1980), overruled in part, Rosen v. State Bd. of Pub. Accountancy, 689 P.2d 478 (Alaska 1984).

The concomitant federal statute, 15 U.S.C.S. § 45(a)(1), the Federal Trade Commission Act, is not limited to consumer transactions, and neither should this section be so limited since it closely parallels the language of the federal act; the legislature specifically provided that due consideration and great weight be given to interpretations of the federal act. Western Star Trucks, Inc. v. Big Iron Equip. Serv., 101 P.3d 1047 (Alaska 2004).

Vandalizing a customer’s property is an unfair trade act within the meaning of this section. State v. Grogan, 628 P.2d 570 (Alaska 1981).

Standing timber not a “consumer good.” —

Because the standing timber that was involved in a sale was not a “consumer good,” but real property, the sale was beyond the scope of the unfair trade practices statute. Aloha Lumber Corp. v. University of Alaska, 994 P.2d 991 (Alaska 1999).

Deceptive and unfair acts by collection agencies. —

Threats by debt collection agencies of imminent legal action when no such action is actually contemplated is a deceptive act or practice. State v. O'Neill Investigations, 609 P.2d 520 (Alaska 1980).

Harassment of debtors by telephone calls to them, their relatives or their employers constitutes an unfair act or practice. State v. O'Neill Investigations, 609 P.2d 520 (Alaska 1980).

A misrepresentation by a debt collection agency that failure to pay an alleged debt will result in impairment of one’s credit rating has been held to be an unfair and deceptive act or practice. State v. O'Neill Investigations, 609 P.2d 520 (Alaska 1980).

The use by collection agencies of simulated legal documents or collection forms labelled “Final Demand Before Legal Action” when no legal action is in fact taken constitutes a deceptive act. State v. O'Neill Investigations, 609 P.2d 520 (Alaska 1980).

When a limited liability company (LLC) engaged in pursuing nonjudicial foreclosures and the LLC's manager were held to be “debt collectors,” under the Fair Debt Collection Practices Act (FDCPA), and the LLC's foreclosure notice did not state the total amount of the debt owed, injunctive relief was proper because (1) an FDCPA violation was an unfair trade practice, (2) AS 45.50.471(a) , outlawing unfair practices, had a fixed meaning, (3) applying the Unfair Trade Practices Act (UTPA) did not depend on a service's relation to real property, (4) the UTPA was not limited to “consumer” services, and (5) such injunctions were not limited to “consumers.” Alaska Trustee, LLC v. Ambridge, 372 P.3d 207 (Alaska 2016).

Bank’s activities in connection with a mortgage and subsequent mortgage loan servicing arrangements were not covered by this article because the mortgage loan was not a “good” within the meaning of the statute and the bank was not an independent debt collector. Barber v. National Bank, 815 P.2d 857 (Alaska 1991).

Conduct creating likelihood to deceive. —

In alleging that the competitor’s ads had the capacity to deceive or confuse a buyer in connection with the advertisement of services, as prohibited by paragraph (b)(11), the complaint was sufficient to defeat a motion to dismiss for failure to state a claim, but a review of the factual support for these claims provided a strong basis for the superior court’s finding that the action was frivolous and brought to harass the defendants, where plaintiffs never produced credible evidence that the central theme of the ads was unfair or deceptive; they did not produce even one person who had read the ads and could testify to any confusion; and they produced no evidence that they had suffered any monetary damage, as required for a private action under AS 45.50.531(a) . Garrison v. Dixon, 19 P.3d 1229 (Alaska 2001).

Substantial evidence supported a jury’s finding that an automobile dealer was liable under AS 45.50.471(a) and (b)(14) where the dealer had waited a full month after actually learning of a purchaser’s disability before it first consulted its lawyer about a guardianship’s effect on a disputed contract, the dealer had actively fought to defeat the guardians’ efforts to rescind the sale, and it had counterclaimed against the guardians for the amount it had paid to the entity that had purchased the financing contract. Kenai Chrysler Ctr., Inc. v. Denison, 167 P.3d 1240 (Alaska 2007).

Article not applicable to sale of real property. —

This article does not apply at all to the sale of real property; rather, the entire thrust of this article is directed at regulating practices relating to transactions involving consumer goods and services. State v. First Nat'l Bank, 660 P.2d 406 (Alaska 1982).

Article not applicable to lease of real property. —

Because this article does not apply to real property transactions, and a lease is a real property transaction because it contains a transfer of interest in the property, this section does not apply to residential leases. Roberson v. Southwood Manor Assocs., LLC, 249 P.3d 1059 (Alaska 2011).

Applicability to commercial transactions involving personalty. —

Trial court correctly applied this section to a transaction between a parts dealer and a commercial truck manufacturer, finding that the manufacturer had misrepresented the consequences of an oral agreement it had made with the dealer; unfair trade practices provisions do not apply only to transactions involving consumer goods and services. Western Star Trucks, Inc. v. Big Iron Equip. Serv., 101 P.3d 1047 (Alaska 2004).

While the Unfair Trade Practices and Consumer Protection Act does not apply to transactions involving real estate, the Supreme Court of Alaska did not bar the application of the act to transactions between businesses involving services, or commercial or consumer personal property. Western Star Trucks, Inc. v. Big Iron Equip. Serv., 101 P.3d 1047 (Alaska 2004).

Applicability of exemption. —

AS 45.50.481(a)(1) does not exempt aircraft leases from unfair trade practices claims brought pursuant to this section and AS 45.50.531(a) . Here the exemption defense was raised for the first time in a motion for judgment notwithstanding the verdict, which was improper under Alaska R. Civ. P. 50(b); moreover, the exemption defense failed on the merits because no specific regulations governing the leases were identified. Alaska Interstate Constr., LLC v. Pac. Diversified Invs., 279 P.3d 1156 (Alaska 2012).

Application of act. —

Uniform Trade Practices and Consumer Protection Act, AS 45.50.471 et seq., does not apply to a personal injury action because too many conflicts with a personal injury claim barred assuming such a legislative intent, which “ascertainable loss of money or property” in AS 45.50.531(a) did not state. Donahue v. Ledgends, Inc., 331 P.3d 342 (Alaska 2014).

Bankruptcy court did not err in concluding there was no violation of the Alaska Uniform Trade Protections Act, based on an investment in a real estate project, because neither party to the action was a business, appellant did not attempt to purchase goods or services from the debtor, and they were not engaged in trade or commerce. Keeton v. Flanagan (In re Flanagan), 642 Fed. Appx. 784 (9th Cir. 2016).

Application of article to standing to maintain antitrust action. —

Alaska Gasline Port Authority could not maintain an antitrust action for violations of § 7 of the Clayton Act and the Unfair Trade Practices and Consumer Protection Act, this article, against natural gas producer companies for their alleged refusal to sell the Authority gas for its proposed pipeline because the Authority lacked standing, inasmuch as its ability to finance the construction of the proposed pipeline was speculative at best; moreover, the Authority could not evade its obligation to show its preparedness by arguing that the companies’ wrongdoings made its efforts futile. Alaska Gasline Port Auth. v. ExxonMobil Corp., — F. Supp. 2d — (D. Alaska June 19, 2006).

Pro se litigant lacks standing to bring class action. —

Where an airline customer brought both class and individual claims against an airline under this section and state antitrust law, AS 45.50.562 , AS 45.50.564 , based on its standard ticket terms and policies, the superior court properly dismissed the claim; as a pro se litigant, the customer could not bring an action on behalf of the class, while the customer’s individual claims were preempted by the Airline Deregulation Act, 49 U.S.C.S. § 41713. Hallam v. Alaska Airlines, Inc., 91 P.3d 279 (Alaska 2004).

Cost-plus contract for house. —

The Unfair Trade Practices and Consumer Protection Act did not apply to a cost-plus contract between a builder and the buyer of a house because the contract was not an “installment sale.” Munn v. Thornton, 956 P.2d 1213 (Alaska 1998).

Time limitations. —

Consumer’s claim that a car dealership violated Alaska’s Unfair Trade Practices and Consumer Protection Act by charging fees and costs not included in a vehicle’s advertised sale price, including a document preparation fee, was time-barred because the limitations period under AS 45.50.531(f) began to run when the consumer discovered, or reasonably should have discovered, that the car dealership’s conduct caused a loss and not when the consumer discovered that the conduct was illegal. Weimer v. Cont'l Car & Truck, LLC, 237 P.3d 610 (Alaska 2010).

Client's Unfair Trade Practices Act (UTPA) claim against a former attorney was not time-barred because the client suffered no ascertainable loss until an Internal Revenue Service lien asserted against the client's debtor's property preempted the client's ability to secure the debtor's payments, due to the attorney's failure to record the client's interest. The client sued within the two-year limitations period, and could not have discovered the UTPA claim that the attorney did not tell the client the attorney lacked malpractice insurance until after the client sued. Jones v. Westbrook, 379 P.3d 963 (Alaska 2016).

In Medicaid recipient’s suit against hospital and financial services corporation, alleging that the recipient had been billed in breach of the hospital’s provider agreement with the state, the recipient’s Unfair Trade Practice Act (UTPA) claim was not exempt, and he had a viable UTPA claim. Smallwood v. Cent. Peninsula Gen. Hosp., 151 P.3d 319 (Alaska 2006).

Trade name. —

Jury’s verdict finding that name of plaintiff’s trolley tours business had acquired secondary meaning and that defendants who operated a separate trolley tours business with the same name infringed plaintiff’s trade name was supported by the evidence. Alderman v. Iditarod Properties, 32 P.3d 373 (Alaska 2001).

Investigation of acts violating both this article and article 4 of chapter. —

Although it does not necessarily follow that an act that violates the Unfair Trade Practices and Consumer Protection Act, AS 45.50.471 45.50.561 would also violate the Restraint of Trade Act, AS 45.50.562 45.50.596 , if an act does violate both statutes, an investigation pursuant to AS 45.50.495 would be appropriate. Matanuska Maid v. State, 620 P.2d 182 (Alaska 1980), overruled in part, Rosen v. State Bd. of Pub. Accountancy, 689 P.2d 478 (Alaska 1984).

Since the bidding and pricing activities under investigation could have conceivably lacked some essential element of an AS 45.50.562 violation, which is Alaska’s equivalent of the Sherman Act, 15 U.S.C. § 1 et seq., it was appropriate for the state to investigate as well the possible violation of this section which is Alaska’s equivalent of the Federal Trade Commission Act, 15 U.S.C. § 41 et seq. Matanuska Maid v. State, 620 P.2d 182 (Alaska 1980), overruled in part, Rosen v. State Bd. of Pub. Accountancy, 689 P.2d 478 (Alaska 1984).

Motion to sever denied. —

Defendant’s motion to sever claims of violations of the Unfair Trade Practices and Consumer Protection Act on the basis that evidence offered about any one transaction would be inadmissible character evidence with respect to other transactions was properly denied. Anchorage Nissan v. State, 941 P.2d 1229 (Alaska 1997).

Sanction upheld for withholding discovery. —

In a suit alleging unfair or deceptive practices, sanctions were proper following business person’s withholding of discovery of whether false claims had been made about his companies and products; deeming the alleged facts to be admitted was a sanction sufficiently tailored to the discovery violation. Lee v. State, 141 P.3d 342 (Alaska 2006).

Costs. —

Superior court erred in granting a borrower’s motion for summary judgment because, in returning a beneficiary of a deed of trust to its status quo ante when a borrower reinstated after a default, Alaska Trustee could statutorily include all reasonable costs incurred pursuing a foreclosure regardless of whether the deed of trust specifically provided for the inclusion of such costs, and the Unfair Trade Practices Act did not apply to nonjudicial deed of trust foreclosures. Alaska Tr., LLC v. Bachmeier, 332 P.3d 1 (Alaska 2014).

Liability of state. —

The state owed no duty of care to car dealerships relating to violations by insurance companies in the disposition of “totaled” vehicles and, thus, could not be held liable for not enforcing the Unfair Trade Practices and Consumer Protection Act. Anchorage Nissan v. State, 941 P.2d 1229 (Alaska 1997).

Abuse of discretion. —

The superior court improperly dismissed plaintiff anesthesiologist’s claims resulting from the termination of his privileges at defendant hospital where his complaint alleged facts which, if proven, were sufficient to state a claim for unreasonable restraint of trade, group boycott, attempted monopolization, unfair trade practices, defamation, breach of oral contract, interference with a prospective economic advantage, and intentional infliction of emotional distress. Odom v. Fairbanks Mem. Hosp., 999 P.2d 123 (Alaska 2000).

Applied in

Alaska Travel Specialists v. First Nat'l Bank, 919 P.2d 759 (Alaska 1996); Casciola v. F. S. Air Serv., 120 P.3d 1059 (Alaska 2005).

Quoted in

Swenson Trucking & Excavating v. Truckweld Equip. Co., 604 P.2d 1113 (Alaska 1980).

Cited in

O'Neill Investigations v. Illinois Employers Ins., 636 P.2d 1170 (Alaska 1981); O.K. Lumber Co. v. Providence Wash. Ins. Co., 759 P.2d 523 (Alaska 1988); Pierce v. Catalina Yachts, Inc., 2 P.3d 618 (Alaska 2000); Helfrich v. Valdez Motel Corp., 207 P.3d 552 (Alaska 2009); Neese v. Lithia Chrysler Jeep of Anchorage, Inc., 210 P.3d 1213 (Alaska 2009).

Collateral references. —

32 Am. Jur. 2d, False Pretenses, § 1 et seq.

37 Am. Jur. 2d, Fraud and Deceit, § 55 et seq.

35 C.J.S. False Pretenses, § 9 et seq.

Validity, construction, and effect of state legislation regulating or controlling “bait-and-switch” or “disadvertising or sales practices, 50 ALR3d 1008.

Scope and exemptions of state deceptive trade practice and consumer protection acts, 89 ALR3d 399; 77 ALR4th 991; 89 ALR4th 854.

Practices forbidden by state deceptive trade practice and consumer protection acts, 89 A.L.R.3d 449.

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

Worldwide web domain as violating state trademark protection statute or state unfair trade practices act, 96 ALR5th 1.

Validity, construction and application of state laws concerning, relating to, or encompassing disclosure of and tampering with motor vehicle odometer — validity of statutory provisions, construction of statute and particular terms, and remedies, 66 ALR6th 351.

Validity, construction, and application of state statute forbidding unfair trade practice or competition by discriminatory allowance of rebates, commissions, discounts, or the like, 83 ALR6th 419.

Protection of commercial speech under First Amendment-Supreme Court cases, 164 ALR Fed. 1.

Sec. 45.50.472. Junk telephone calls. [Repealed, § 5 ch 142 SLA 1996.]

Sec. 45.50.473. Disclosure of costs of certain telephone services.

  1. A person may not provide an alternate operator service without disclosing to the consumer before a charge is incurred the cost of the service provided by the person and the identity of the person providing those services.
  2. The owner of a place where telephone business from consumers is aggregated, including a hotel, motel, hospital, and pay telephone other than a telephone utility regulated by the Regulatory Commission of Alaska, shall disclose a surcharge added to the cost of local or long distance telephone service before the service is provided.  Disclosure may be made by posting the amount of the surcharge on or near the telephone instruments subject to the surcharge or by other reasonable written or oral means.
  3. A violation of this section constitutes an unfair or deceptive act or practice under AS 45.50.471 . It is presumed that actual damages to the consumer under AS 45.50.531(a) are equal to the cost of the service provided plus $200. Additional damages must be proved.
  4. In this section, “alternate operator service”
    1. means a connection to intrastate or interstate long-distance telecommunications facilities from a nonresidential location in the state including a hotel, motel, hospital, or customer-owned pay telephone, or from a place where business from consumers is aggregated, by a person that does not own any of the telecommunications facilities being connected through the service;
    2. does not include an intrastate or interstate long-distance carrier that contracts for operator services and charges rates for those services that are no greater than the rates charged by long-distance carriers regulated by the Regulatory Commission of Alaska or by the Federal Communications Commission.

History. (§ 4 ch 82 SLA 1990; am § 2 ch 96 SLA 1998; am §§ 13, 14 ch 24 SLA 2019)

Revisor’s notes. —

In 1999, in subsections (a) and (b) “Regulatory Commission of Alaska” was substituted for “Alaska Public Utilities Commission” in accordance with § 30(a), ch. 25, SLA 1999.

Cross references. —

For legislative findings in connection with the enactment of this section, see § 1, ch. 82, SLA 1990 in the Temporary and Special Acts. For failure to comply with this section as an unlawful trade practice, see AS 45.50.471(b) .

Effect of amendments. —

The 2019 amendment, effective November 27, 2019, in (a), deleted the former second sentence, which read, “This section does not affect the power of the regulatory commission of Alaska to regulate providers of alternate operator services under AS 42.05 in a manner consistent with this section.”; rewrote (d), which read, “In this section, ‘alternate operator service’ has the meaning given in AS 42.05.325(c).”

Sec. 45.50.474. Required disclosures in promotions and shoreside sales on board cruise ships.

  1. A person may not conduct a promotion on board a cruise ship that mentions or features a business in a state port that has paid something of value for the purpose of having the business mentioned, featured, or otherwise promoted, unless the person conducting the promotion clearly and fully discloses in all written materials used in the promotion that the featured businesses have paid to be included in the promotion. If the value paid by the business is more than 10 percent of any single sale, the disclosure must also state that more than a 10 percent commission is being retained by the person making the promotion and that other alternatives may be available at a port of call; and the disclosure must provide the address, Internet website address, and telephone number of any existing visitors bureaus at each future port of call.
  2. A person or other entity aboard a cruise ship conducting or making a sale of tours, flightseeing operations, or other shoreside activities to be delivered by a vendor or other entity at a future port of call shall disclose, in writing at the point of sale,
    1. that the onboard sale is a retail-wholesale relationship between the cruise ship and the shoreside vendor that results in a percentage of the sale being retained by the cruise ship;
    2. that other alternatives at different prices and with different features may be available at a port of call;
    3. the address, Internet website address, and telephone number of the existing visitors bureaus at each future port of call; and
    4. if the amount of commission or percentage of the total sale retained or returned to the person or entity making or attempting to make the sale exceeds 20 percent of the total cost of the services or goods provided by a shoreside vendor, that more than 20 percent of the total sale price is being retained as a commission by the person or entity making the sale.
  3. A written notice of disclosure under (a) or (b) of this section must be in a type that is not less than 14-point typeface and in a contrasting color calculated to draw attention to the disclosure.
  4. Each violation of this section constitutes an unfair trade practice under AS 45.50.471 .
  5. In this section, “cruise ship” means a ship that operates at least 48 hours in length for ticketed passengers, provides overnight accommodations and meals for at least 250 passengers, is operated by an authorized cruise ship operator, and is certified under the International Convention for the Safety of Life at Sea or otherwise certified by the United States Coast Guard.

History. (§ 5 ch 109 SLA 1994; am § 10, 2006 Primary Election Ballot Measure No. 2; am §§ 1 — 4 ch 19 SLA 2007)

Revisor’s notes. —

In 2006, what was enacted as the last sentence of subsection (c) [now (d)] in 2006 Primary Ballot Measure No. 2 was relettered as subsection (d) [now (e)]. Subsection (c) was enacted as (e); relettered in 2007, at which time former subsections (c) and (d) were relettered as (d) and (e), respectively.

Editor’s notes. —

Section 11, 2006 Primary Election Ballot Measure No. 2, part of the initiative that made the 2006 repeal and reenactment of this section, provides that “[I]t is the intention of the people of Alaska that any portion of this legislation that is declared unlawful shall be stricken in a manner that preserves the remaining portion of the remaining legislation to the maximum extent possible.”

Sec. 45.50.475. Unlawful, unwanted telephone advertisements and solicitations.

  1. A person is in violation of AS 45.50.471(b)(41) if the person
    1. [Repealed, § 35 ch 55 SLA 2004.]
    2. engages in the telephone solicitation of a customer whose telephone number has been registered with the national do not call registry for the minimum amount of time required by the national do not call registry before the date the call is made;
    3. engages in the telephone solicitation of a customer who has previously communicated to the telephone solicitor, or to the business enterprise or charitable organization for which the person is calling, the customer’s desire not to receive telephone solicitations to that number; or
    4. originates a telephone call using an automated or recorded message as a telephonic advertisement or a telephone solicitation.
  2. A local exchange telecommunications company and a company that provides a telephone directory on behalf of a local exchange telecommunications company shall provide for the identification in the telephone directory of those residential customers who do not wish to receive telephone solicitations. The local exchange telecommunications company may impose a reasonable charge for identification in the directory. The charge shall be based on the cost of providing the identification and is subject to the approval of the Regulatory Commission of Alaska.
  3. [Repealed, § 35 ch 55 SLA 2004.]
  4. A person who employs individuals to engage in telephone solicitations is not liable for a violation of (a)(1) — (3) of this section if the person establishes that
    1. the person has adopted and implemented written procedures and policies to comply with (a)(1) — (3) of this section, including corrective actions if appropriate;
    2. the person has trained its personnel in the procedures and policies established under (1) of this subsection;
    3. the call that violated (a)(1) — (3) of this section was made contrary to the procedures and policies established by the person; and
    4. the call that violated (a)(1) — (3) of this section was made as a result of a good faith error.
  5. An individual who solicits a telephone customer in violation of (a)(1) — (3) of this section is not liable for the violation if the individual establishes that the individual did not intend to make the call in violation of this section and did not recklessly disregard information or policies and procedures that would have avoided the improper call.
  6. Local exchange telecommunications companies shall inform customers of the provisions of this section. Notification shall be made by
    1. quarterly inserts in the billing statements mailed to customers; and
    2. clear and conspicuous publication of the notice in the consumer information pages of local telephone directories.
  7. In this section,
    1. “charitable organization” has the meaning given in AS 45.68.900 ;
    2. “customer” means a telephone customer of a telecommunications company;
    3. “national do not call registry” means the data base of telephone numbers of customers who do not wish to receive telephone solicitations established and maintained by the Federal Trade Commission and the Federal Communications Commission;
    4. “telephone solicitation”
      1. means the solicitation by a person by telephone of a customer at the residence of the customer or on a customer’s cellular or mobile telephone for the purpose of encouraging the customer to purchase property, goods, or services, or make a donation;
      2. does not include
        1. calls made in response to a request or inquiry by the called customer or communication made during a call made by the customer;
        2. calls made by a charitable organization or volunteers on behalf of the charitable organization to a member of the organization or to a person who, within the last 18 months, has made a donation to the organization or expressed an interest in making a donation, but only if the charitable organization has not received a request from the member or person asking that the telephone solicitations cease;
        3. calls limited to soliciting the expression of ideas, opinions, or votes;
        4. business-to-business calls; or
        5. a person soliciting business from prospective purchasers who have, within the last 18 months, purchased from the person making the solicitation or from the business enterprise for which the person is calling but only if the person or business enterprise has not received a request from the prospective purchaser asking that telephone solicitations cease; the person or business enterprise is presumed to have received a written request no later than 10 days after the prospective purchaser mailed it, properly addressed and with the appropriate postage.

History. (§ 4 ch 142 SLA 1996; am §§ 64, 65 ch 35 SLA 2003; am §§ 2 — 8, 35, 39 ch 55 SLA 2004; am § 1 ch 32 SLA 2009)

Revisor’s notes. —

In 1999, in subsections (b) and (c) “Regulatory Commission of Alaska” was substituted for “Alaska Public Utilities Commission” in accordance with § 30(a), ch. 25, SLA 1999.

Paragraph (g)(3) was enacted as paragraph (g)(4) and renumbered in 2004, at which time former paragraph (g)(3) was renumbered as (g)(4).

Cross references. —

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

Effect of amendments. —

The 2009 amendment, effective September 14, 2009, in (g)(4)(A) added, “or on a customer’s cellular or mobile telephone” following “residence of the customer”.

Sec. 45.50.477. Use of titles relating to industrial hygiene.

  1. A person may not use the title “industrial hygienist,” the initials “I.H.,” another term that includes the phrase “industrial hygiene” or similar words, or represent to the public that the person is an industrial hygienist, unless the person has a baccalaureate or graduate degree in industrial hygiene, biology, chemistry, engineering, physics, or a closely related physical or biological science from a college or university accredited by a national or regional accreditation association recognized by the Council on Recognition of Postsecondary Accreditation, or a degree based on equivalent academic training, and has acquired competence in industrial hygiene through special studies or work experience sufficient to provide the person with the ability and competence to
    1. anticipate and recognize the environmental factors and stresses associated with work and work operations and to understand their effects on people and their well-being;
    2. evaluate, on the basis of training and demonstrated work experience and with the aid of quantitative measurement techniques, the magnitude of the factors and stresses identified under (1) of this subsection in terms of their ability to impair human health and well-being; and
    3. prescribe methods to prevent, eliminate, control, or reduce the factors and stresses identified under (a) of this subsection when necessary to alleviate their effects.
  2. A person may not use the title “industrial hygienist in training,” the initials “I.H.I.T.,” another term involving the phrase “industrial hygienist in training” or a variation of those words, or represent to the public that the person is an industrial hygienist in training, unless the person is certified as an industrial hygienist in training by the American Board of Industrial Hygiene.
  3. A person may not use the title “certified industrial hygienist,” the initials “C.I.H.,” another term involving the phrase “certified industrial hygienist” or a variation of those words, or represent to the public that the person is a certified industrial hygienist unless the person is certified as a certified industrial hygienist by the American Board of Industrial Hygiene.
  4. A state or local government agency may not prohibit or restrict the practice of industrial hygiene by a qualified individual who complies with this section except to the extent that a state statute allows the agency to regulate a specific activity that may be included in the practice of industrial hygiene.
  5. In this section, “industrial hygiene” means the science and practice devoted to the anticipation, recognition, evaluation, and control of environmental factors and stresses arising in or from the workplace that may cause illness, impaired health or well-being, or significant discomfort among workers and may also affect persons outside the workplace.

History. (§ 2 ch 69 SLA 1995; am § 38 ch 32 SLA 1997)

Sec. 45.50.479. Limitation on electronic mail.

  1. A person may not send unsolicited commercial electronic mail to another person from a computer located in this state or to an electronic mail address that the sender knows is held by a resident of this state if the commercial electronic mail contains information that consists of explicit sexual material that another law provides may only be viewed, purchased, rented, leased, or held by an individual who is 18 years of age or older, unless the subject line of the advertisement contains “ADV:ADLT” as the first eight characters.
  2. In (a) of this section,
    1. “commercial electronic mail” means electronic mail consisting of advertising material for the lease, sale, rental, gift, offer, or other disposition of real property, goods, or services, including an extension of credit;
    2. “explicit sexual material” means material that visually or aurally depicts conduct described in AS 11.41.455(a) , but is not limited to conduct engaged in by a child under 18 years of age;
    3. “unsolicited commercial electronic mail” means commercial electronic mail sent to a person who
      1. does not have an existing personal or business relationship with the sender; and
      2. has not given permission for or requested the sending of the commercial electronic mail.

History. (§ 2 ch 14 SLA 2003)

Cross references. —

For violation of this section as an unlawful trade practice, see AS 45.50.471(b) .

Sec. 45.50.480. [Repealed, § 1 ch 246 SLA 1970.]

Sec. 45.50.481. Exemptions.

  1. Nothing in AS 45.50.471 45.50.561 applies to
    1. an act or transaction regulated by a statute or regulation administered by the state, including a state regulatory board or commission, unless the statute or regulation does not prohibit the practices declared unlawful in AS 45.50.471 ;
    2. an act done by the publisher, owner, agent, or employee of a newspaper, periodical, or radio or television station in the publication or dissemination of an advertisement, when the owner, agent, or employee did not have knowledge of the false, misleading, or deceptive character of the advertisement or did not have a direct financial interest in the sale or distribution of the advertised product or service;
    3. an act or transaction regulated under AS 21.36 or AS 06.05 or a regulation adopted under the authority of those chapters.
  2. The exemption in (a)(3) of this section does not apply to an act or transaction between a bank and its borrowers, depositors, or other customers or potential customers.
  3. The exemption in (a)(1) of this section does not apply to an act or transaction listed in AS 45.50.471(b) or regulated under AS 06.60.

History. (§ 2 ch 246 SLA 1970; am §§ 2, 3 ch 53 SLA 1974; am § 6 ch 64 SLA 1986; am § 5 ch 82 SLA 1990; am § 100 ch 26 SLA 1993; am § 9 ch 50 SLA 2007; am §§ 1, 2 ch 22 SLA 2012)

Effect of amendments. —

The 2012 amendment, effective August 15, 2012, rewrote (a)(1), which formerly read “an act or transaction regulated under laws administered by the state, by a regulatory board or commission except as provided by AS 45.50.471(b) (27) and (30), or officer acting under statutory authority of the state or of the United States, unless the law regulating the act or transaction does not prohibit the practices declared unlawful in AS 45.50.471 ,”; in (c), inserted “listed in AS 45.50.471(b) or”.

Notes to Decisions

Applicability of paragraph (a)(1) exemption. —

Paragraph (1) of this section (now paragraph (a)(1)) exempts only those acts or transactions that are the subject of ongoing, careful regulation. Matanuska Maid v. State, 620 P.2d 182 (Alaska 1980), overruled in part, Rosen v. State Bd. of Pub. Accountancy, 689 P.2d 478 (Alaska 1984).

Unfair acts or practices are exempt under paragraph (1) of this section (now paragraph (a)(1)) only where the business is both regulated and unfair acts and practices are prohibited. Matanuska Maid v. State, 620 P.2d 182 (Alaska 1980), overruled in part, Rosen v. State Bd. of Pub. Accountancy, 689 P.2d 478 (Alaska 1984).

The exemption contained in paragraph (1) of this section (now paragraph (a)(1)) was not intended to apply to acts proscribed by the Alaska Restraint of Trade Act, AS 45.50.562 45.50.596 . Matanuska Maid v. State, 620 P.2d 182 (Alaska 1980), overruled in part, Rosen v. State Bd. of Pub. Accountancy, 689 P.2d 478 (Alaska 1984).

Since the Restraint of Trade Act, AS 45.50.562 45.50.596 , does not regulate the dairy industry within the meaning of paragraph (1) of this section (now paragraph (a)(1)), the exemption does not apply. Matanuska Maid v. State, 620 P.2d 182 (Alaska 1980), overruled in part, Rosen v. State Bd. of Pub. Accountancy, 689 P.2d 478 (Alaska 1984).

Debt collection agency argued that any alleged violations of the Unfair Trade Practices and Consumer Protection Act (UTPA) were exempt because they were already prohibited by the Alaska Rules of Civil Procedure and the Alaska Rules of Professional Conduct; however, those rules are not the type of ongoing, careful regulation required to trigger an exemption under this section. Pepper v. Routh Crabtree, APC, 219 P.3d 1017 (Alaska 2009).

This section does not exempt aircraft leases from unfair trade practices claims brought pursuant to AS 45.50.471(a) , AS 45.50.531(a) ; here the exemption defense was raised for the first time in a motion for judgment notwithstanding the verdict, which was improper under Alaska R. Civ. P. 50(b); moreover, the exemption defense failed on the merits because no specific regulations governing the leases had been identified. Alaska Interstate Constr., LLC v. Pac. Diversified Invs., 279 P.3d 1156 (Alaska 2012).

Home health agency and manager were not statutorily exempt from the Unfair Trade Practices and Consumer Protection Act because applicable regulations did not clearly bar the agency's conduct at issue. Adkins v. Collens, 444 P.3d 187 (Alaska 2019), cert. denied, — U.S. —, 140 S. Ct. 2508, 206 L. Ed. 2d 463 (U.S. 2020).

Mere regulation under a separate and distinct statutory scheme satisfies only one prong of paragraph (1) of this section (now paragraph (a)(1)); unfair acts and practices are exempt from the purview of the act only where the business is both regulated elsewhere and the unfair acts and practices are therein prohibited. State v. O'Neill Investigations, 609 P.2d 520 (Alaska 1980).

Applicability of paragraph (a)(3) exemption. —

When an employee claimed various parties conspired to present the Alaska Workers' Compensation Board a video falsely depicting the employee's physical abilities, in an attempt to terminate the employee's workers' compensation benefits, the employee's Unfair Trade Practices Act claim against an insurer had to be dismissed because the exemption in AS 45.50.481(a)(3) applied. Cornelison v. TIG Ins., 376 P.3d 1255 (Alaska 2016).

This article embraces independent debt collection practices. State v. O'Neill Investigations, 609 P.2d 520 (Alaska 1980).

Article not applicable to sale of real property. —

This article does not apply at all to the sale of real property; rather, the entire thrust of this article is directed at regulating practices relating to transactions involving consumer goods and services. State v. First Nat'l Bank, 660 P.2d 406 (Alaska 1982).

Where Medicaid recipient brought suit against hospital and financial services corporation alleging that the recipient was billed in breach of the hospital’s provider agreement with the state, the recipient’s Unfair Trade Practice Act (UTPA) claim was not exempt, and he had a viable UTPA claim. Smallwood v. Cent. Peninsula Gen. Hosp., 151 P.3d 319 (Alaska 2006).

Applied in

O.K. Lumber Co. v. Providence Wash. Ins. Co., 759 P.2d 523 (Alaska 1988).

Collateral references. —

Scope and exemptions of state deceptive trade practice and consumer protection acts, 89 ALR3d 399; 77 ALR4th 991; 89 ALR4th 854.

Sec. 45.50.490. [Repealed, § 1 ch 246 SLA 1970.]

Sec. 45.50.491. Regulations.

The attorney general, in accordance with AS 44.62 (Administrative Procedure Act), may adopt regulations interpreting and forms necessary for administering the provisions of AS 45.50.471 45.50.561 .

History. (§ 2 ch 246 SLA 1970; am § 4 ch 53 SLA 1974)

Administrative Code. —

For retail advertising, see 9 AAC 5.

Sec. 45.50.495. Investigative power of attorney general.

  1. If the attorney general has cause to believe that a person has engaged in, is engaging in, or is about to engage in a deceptive trade practice under AS 45.50.471 , the attorney general may
    1. request the person to file a statement or report in writing, under oath, on forms prescribed by the attorney general, setting out all facts and circumstances concerning the sale or advertisement of property by the person, and other information considered necessary;
    2. examine under oath any person in connection with the sale or advertisement of property;
    3. examine property or sample of the property, record, book, document, account, or paper that the attorney general considers necessary;
    4. make true copies of records, books, documents, accounts, or papers examined under (3) of this subsection, which may be offered in evidence in place of the originals in actions brought under AS 45.50.471 45.50.561 ; and
    5. under an order of the superior court, impound samples of property that are material to the investigation and retain the sample until proceedings undertaken under AS 45.50.471 — 45.50.561 are completed.
  2. The attorney general, in addition to other powers conferred by this section, may issue subpoenas to require the attendance of witnesses or the production of documents or other physical evidence, administer oaths, and conduct hearings to aid an investigation or inquiry.  Service of an order or subpoena shall be made in the same manner as a summons in a civil action in the superior court.

History. (§ 5 ch 53 SLA 1974)

Notes to Decisions

Investigation of acts violating both article 3 and article 4 of chapter. —

Although it does not necessarily follow that an act that violates the Unfair Trade Practices and Consumer Protection Act, AS 45.50.471 45.50.561 , would also violate the Restraint of Trade Act, AS 45.50.562 45.50.596 , if an act does violate both statutes, an investigation pursuant to this section would be appropriate. Matanuska Maid v. State, 620 P.2d 182 (Alaska 1980), overruled in part, Rosen v. State Bd. of Pub. Accountancy, 689 P.2d 478 (Alaska 1984).

Since the bidding and pricing activities under investigation could have conceivably lacked some essential element of an AS 45.50.562 violation, which is Alaska’s equivalent of the Sherman Act, it was appropriate for the state to investigate as well the possible violation of AS 45.50.471 , which is Alaska’s equivalent of the Federal Trade Commission Act, 15 U.S.C. § 41 et seq. Matanuska Maid v. State, 620 P.2d 182 (Alaska 1980), overruled in part, Rosen v. State Bd. of Pub. Accountancy, 689 P.2d 478 (Alaska 1984).

The state cannot be expected to know with certainty the exact nature of a suspected violation. This uncertainty is the very reason for conferring precomplaint investigatory authority on the attorney general. Matanuska Maid v. State, 620 P.2d 182 (Alaska 1980), overruled in part, Rosen v. State Bd. of Pub. Accountancy, 689 P.2d 478 (Alaska 1984).

Sec. 45.50.500. [Repealed, § 1 ch 246 SLA 1970.]

Sec. 45.50.501. Restraining prohibited acts.

  1. When the attorney general has reason to believe that a person has used, is using, or is about to use an act or practice declared unlawful in AS 45.50.471 , and that proceedings would be in the public interest, the attorney general may bring an action in the name of the state against the person to restrain by injunction the use of the act or practice. The action may be brought in the superior court in the judicial district in which the person resides or is doing business or has the person’s principal place of business in the state, or, with the consent of the parties, in any other judicial district in the state.
  2. The court may make additional orders or judgments that are necessary to restore to any person in interest any money or property, real or personal, which may have been acquired by means of an act or practice declared to be unlawful by AS 45.50.471 .

History. (§ 2 ch 246 SLA 1970)

Notes to Decisions

Article not applicable to sales of real property. —

The scope of the consumer protection act does not enlarge to include sales of real property when suit is instituted by the state even though this section contains no limitation to “goods or services” comparable to that in such sections as AS 45.50.561 (4) (now (a)(9)) or AS 45.50.531(a) . State v. First Nat'l Bank, 660 P.2d 406 (Alaska 1982).

Cited in

State v. Grogan, 628 P.2d 570 (Alaska 1981); Casciola v. F. S. Air Serv., 120 P.3d 1059 (Alaska 2005); Neese v. State, 218 P.3d 983 (Alaska 2009).

Collateral references. —

Validity of express statutory grant of power to state to seek, or to court to grant, restitution of fruits of consumer fraud, 59 ALR3d 1222.

Sec. 45.50.510. [Repealed, § 1 ch 246 SLA 1970.]

Sec. 45.50.511. Assurances of voluntary compliance.

In the administration of AS 45.50.471 45.50.561 , the attorney general may accept an assurance of voluntary compliance with respect to any act or practice considered to be violative of AS 45.50.471 45.50.561 from a person who has engaged or was about to engage in such an act or practice. The assurance shall be in writing and shall be filed with and is subject to the approval of the superior court in the judicial district in which the alleged violator resides or is doing business or has the principal place of business in the state. The assurance of voluntary compliance is not considered an admission of violation for any purpose. Matters closed in this way may at any time be reopened by the attorney general for further proceedings in the public interest, under AS 45.50.501 .

History. (§ 2 ch 246 SLA 1970)

Sec. 45.50.521. When information and evidence confidential and nonadmissible.

  1. [Repealed by § 6 ch 53 SLA 1974.]
  2. Subject to the provisions of AS 45.50.501(a) , the attorney general may not make public the name of a person alleged to have committed an act or practice declared unlawful in AS 45.50.471 during an investigation conducted by the attorney general under AS 45.50.471 45.50.561 , nor are the records of investigation or intelligence information of the attorney general obtained under AS 45.50.471 — 45.50.561 considered public records available for inspection by the general public.  However, the attorney general is not prevented from issuing public statements describing or warning of a course of conduct or a conspiracy that constitutes or will constitute an unlawful act or practice, whether on a local, state, regional, or national basis.

History. (§ 2 ch 246 SLA 1970; am § 6 ch 53 SLA 1974)

Sec. 45.50.531. Private and class actions.

  1. A person who suffers an ascertainable loss of money or property as a result of another person’s act or practice declared unlawful by AS 45.50.471 may bring a civil action to recover for each unlawful act or practice three times the actual damages or $500, whichever is greater. The court may provide other relief it considers necessary and proper. Nothing in this subsection prevents a person who brings an action under this subsection from pursuing other remedies available under other law, including common law.
  2. [Repealed, § 4 ch 31 SLA 1987.]
  3. Upon commencement of an action brought under this section the clerk of the court shall mail a copy of the complaint or other initial pleading to the attorney general and, upon entry of an order or judgment in the action, shall mail a copy of the order or judgment to the attorney general.
  4. [Repealed, § 4 ch 31 SLA 1987.]
  5. A permanent injunction or final judgment against a person against whom an action was initiated under AS 45.50.501 is prima facie evidence in an action brought under this section that the person used or employed an act or practice declared unlawful by AS 45.50.471 .
  6. A person may not commence an action under this section more than two years after the person discovers or reasonably should have discovered that the loss resulted from an act or practice declared unlawful by AS 45.50.471 .
  7. [Repealed, § 6 ch 96 SLA 1998.]
  8. If the basis for the action is the fault of the manufacturer or supplier of the merchandise, the manufacturer or supplier who is at fault is liable for the damages awarded against the retailer under this section.
  9. If a person receives an award of punitive damages under (a) of this section, the court shall require that 50 percent of the award be deposited into the general fund of the state under AS 09.17.020(j) . This subsection does not grant the state the right to file or join a civil action to recover punitive damages.

History. (§ 2 ch 246 SLA 1970; am § 1 ch 225 SLA 1976; am §§ 1 — 4 ch 31 SLA 1987; am §§ 3, 4, 6 ch 96 SLA 1998)

Revisor’s notes. —

In subsections (g) and (h), the word “section” was substituted for “chapter” in 1987 to correct a manifest error.

Notes to Decisions

Opportunity to cure technical pleading deficiency. —

Although defendant is a New Jersey corporation with its principal place of business in Ohio and plaintiffs failed to set forth in their amended complaint the essential allegation that defendant was “doing business” in Alaska within the meaning of subsection (a) of this section, dismissing the claim on the basis of this technicality was inappropriate; leave to amend the complaint should have been granted to afford the plaintiffs the opportunity to cure their technical pleading deficiency. Shooshanian v. Wagner, 672 P.2d 455 (Alaska 1983).

Timeliness of claims. —

The timeliness of a municipality’s claim under the Unfair Trade Practices Act is governed by AS 09.10.120 , not subsection (f) of this section. City of Fairbanks v. Amoco Chem. Co., 952 P.2d 1173 (Alaska 1998).

Consumer’s claim that a car dealership violated Alaska’s Unfair Trade Practices and Consumer Protection Act by charging fees and costs not included in a vehicle’s advertised sale price, including a document preparation fee, was time-barred because the limitations period under (f) began to run when the consumer discovered, or reasonably should have discovered, that the car dealership’s conduct caused a loss and not when the consumer discovered that the conduct was illegal. Weimer v. Cont'l Car & Truck, LLC, 237 P.3d 610 (Alaska 2010).

Client's Unfair Trade Practices Act (UTPA) claim against a former attorney was not time-barred because the client suffered no ascertainable loss until an Internal Revenue Service lien asserted against the client's debtor's property preempted the ability to secure the debtor's payments, due to the attorney's failure to record the client's interest,; the client sued within the two-year limitations period, and could not have discovered the UTPA claim that the attorney did not tell the client the attorney lacked malpractice insurance until after the client sued. Jones v. Westbrook, 379 P.3d 963 (Alaska 2016).

Superior court erred in granting partial summary judgment to a member of an LLC, and in finding that the statute of limitations barred a second member's counterclaims, because the second member's counterclaims were compulsory. The counterclaims were "logically related" and automatically related back to the first member's 2013 cross-claims, the first member's pleadings related back to his 2007 original cross-complaint since they focused on the transactions or occurrences that caused the LLC's losses, and the relation back to the 2007 cross-complaint allowed the second member to "escape the bar of the statutes of limitations." Baker v. Duffus, 441 P.3d 432 (Alaska 2019).

Applicability of exemption. —

AS 45.50.481(a)(1) does not exempt aircraft leases from unfair trade practices claims brought pursuant to AS 45.50.471(a) and this section; here the exemption defense was raised for the first time in a motion for judgment notwithstanding the verdict, which was improper under Alaska R. Civ. P. 50(b); moreover, the exemption defense failed on the merits because no specific regulations governing the leases had been identified. Alaska Interstate Constr., LLC v. Pac. Diversified Invs., 279 P.3d 1156 (Alaska 2012).

Applicability of act. —

Uniform Trade Practices and Consumer Protection Act, AS 45.50.471 et seq., did not apply to a personal injury action because too many conflicts with a personal injury claim barred assuming such a legislative intent, which “ascertainable loss of money or property” in AS 45.50.531(a) did not state. Donahue v. Ledgends, Inc., 331 P.3d 342 (Alaska 2014).

Failure to show monetary damages. —

In alleging that the competitor’s ads had the capacity to deceive or confuse a buyer in connection with the advertisement of services, as prohibited by AS 45.50.471(b)(11) , the complaint was sufficient to defeat a motion to dismiss for failure to state a claim, but a review of the factual support for these claims provided a strong basis for the superior court’s finding that the action was frivolous and brought to harass the defendants, where plaintiffs never produced credible evidence that the central theme of the ads was unfair or deceptive; they did not produce even one person who had read the ads and could testify to any confusion; and they produced no evidence that they had suffered any monetary damage, as required for a private action under subsection (a) of this section. Garrison v. Dixon, 19 P.3d 1229 (Alaska 2001).

Where Medicaid recipient’s complaint against a hospital and a financial services corporation pleaded a claim for damages, but his briefing stated that he did not suffer actual damages, it was not necessary to consider whether any claim for damages was time-barred. Smallwood v. Cent. Peninsula Gen. Hosp., 151 P.3d 319 (Alaska 2006).

Punitive damages under subsections (a) and (i). —

The mention of “punitive damages” in subsection (i) simply refers to punitive damages awarded as “other remedies available” under the second sentence of subsection (a). Kenai Chrysler Ctr., Inc. v. Denison, 167 P.3d 1240 (Alaska 2007).

Award of enhanced damages. —

Upon a jury’s finding that a vehicle dealer had committed a material misrepresentation by stating that a motor home was one year newer than it actually was, consumer was entitled to treble damages and to attorney fees. Borgen v. A&M Motors, Inc., 273 P.3d 575 (Alaska 2012).

Abuse of discretion. —

The superior court improperly dismissed plaintiff anesthesiologist’s claims resulting from the termination of his privileges at defendant hospital where his complaint alleged facts which, if proven, were sufficient to state a claim for unreasonable restraint of trade, group boycott, attempted monopolization, unfair trade practices, defamation, breach of oral contract, interference with a prospective economic advantage, and intentional infliction of emotional distress. Odom v. Fairbanks Mem. Hosp., 999 P.2d 123 (Alaska 2000).

Applied in

Swenson Trucking & Excavating v. Truckweld Equip. Co., 604 P.2d 1113 (Alaska 1980); State v. First Nat'l Bank, 660 P.2d 406 (Alaska 1982).

Cited in

O.K. Lumber Co. v. Providence Wash. Ins. Co., 759 P.2d 523 (Alaska 1988); Pierce v. Catalina Yachts, Inc., 2 P.3d 618 (Alaska 2000); Casciola v. F. S. Air Serv., 120 P.3d 1059 (Alaska 2005); Compton v. Kittleson, 171 P.3d 172 (Alaska 2007); Neese v. State, 218 P.3d 983 (Alaska 2009); Pepper v. Routh Crabtree, APC, 219 P.3d 1017 (Alaska 2009).

Collateral references. —

Consumer class action based on fraud or misrepresentations, 53 ALR3d 534.

Right to private action under state consumer protection act, 62 ALR3d 169.

Reasonableness of offer of settlement under state deceptive trade practice and consumer protection acts, 90 ALR3d 1350.

Sec. 45.50.535. Private injunctive relief.

  1. Subject to (b) of this section and in addition to any right to bring an action under AS 45.50.531 or other law, any person who was the victim of the unlawful act, whether or not the person suffered actual damages, may bring an action to obtain an injunction prohibiting a seller or lessor from continuing to engage in an act or practice declared unlawful under AS 45.50.471 .
  2. A person may not bring an action under (a) of this section unless
    1. the person first provides written notice to the seller or lessor who engaged in the unlawful act or practice that the person will seek an injunction against the seller or lessor if the seller or lessor fails to promptly stop the unlawful act or practice; and
    2. the seller or lessor fails to promptly stop the unlawful act or practice after receiving the notice.

History. (§ 5 ch 96 SLA 1998)

Notes to Decisions

Injunctive relief in the absence of actual damages claim. —

Where Medicaid recipient’s complaint against a hospital and a financial services corporation pleaded a claim for damages, but his briefing stated that he did not suffer actual damages, it was not necessary to consider whether any claim for damages was time-barred, and the recipient’s request for injunctive relief was not time-barred. Smallwood v. Cent. Peninsula Gen. Hosp., 151 P.3d 319 (Alaska 2006).

Injunctive relief held proper. —

When a limited liability company (LLC) engaged in pursuing nonjudicial foreclosures and the LLC’s manager were held to be “debt collectors,” under the Fair Debt Collection Practices Act (FDCPA), and the LLC’s foreclosure notice did not state the total amount of the debt owed, injunctive relief was proper because (1) an FDCPA violation was an unfair trade practice, (2) AS 45.50.471(a) , outlawing unfair practices, had a fixed meaning, (3) applying the Unfair Trade Practices Act (UTPA) did not depend on a service’s relation to real property, (4) the UTPA was not limited to “consumer” services, and (5) such injunctions were not limited to “consumers.” Alaska Trustee, LLC v. Ambridge, 372 P.3d 207 (Alaska 2016).

Relief held available but not ordered. —

Where the court provided for significant limitations on a third party payor’s ability to commit further unfair trade practices violations, but did not prohibit the payor from working as a payor in the future, the evidence did not show that the court believed it was unable to impose that remedy, but rather that it chose not to do so. Osbakken v. Whittington, 289 P.3d 894 (Alaska 2012).

Sec. 45.50.536. Mediation.

Notwithstanding the other provisions of AS 45.50.471 45.50.561 , a civil action under AS 45.50.531 or 45.50.535 may be submitted to mediation under the Alaska Rules of Civil Procedure. The mediation must begin within 30 days after the court’s order for mediation. During mediation, the court may, if it is determined appropriate by the court, enjoin the defendant from engaging in the act or practice that is the subject of the civil action.

History. (§ 5 ch 96 SLA 1998)

Editor’s notes. —

Section 7, ch. 96, SLA 1998 provides that the 1998 enactment of this section “applies only to causes of action that accrue on or after September 10, 1998.”

Sec. 45.50.537. Attorney fees, costs, and damages.

  1. In an action brought by a private person under AS 45.50.471 45.50.561 , a prevailing plaintiff shall be awarded costs as provided by court rule and full reasonable attorney fees at the prevailing reasonable rate.
  2. Unless the action is found to be frivolous, in an action brought by a private person under AS 45.50.471 45.50.561 , a prevailing defendant shall be awarded attorney fees and costs as provided by court rule. If the action is found to be frivolous, the attorney fees to be awarded to the defendant shall be full reasonable attorney fees at the prevailing reasonable rate.
  3. Notwithstanding the other provisions of this section, in an action brought by a private person under AS 45.50.471 45.50.561 , if the plaintiff is not the prevailing party and if the court finds that the action was brought by the plaintiff to obtain a competitive business advantage, the court shall award a prevailing defendant costs as provided by court rule, full reasonable attorney fees at the prevailing reasonable rate, and any damages suffered by the prevailing defendant as a result of the plaintiff’s allegations.
  4. In an action brought by the attorney general under AS 45.50.471 45.50.561 , if the attorney general prevails, the state shall be awarded its actual attorney fees and costs, including costs of investigation, to the extent those fees and costs are reasonable.
  5. In this section, “frivolous” means
    1. not reasonably based on evidence or on existing law or a reasonable extension, modification, or reversal of existing law; or
    2. brought to harass the defendant or to cause unnecessary delay or needless expense.

History. (§ 5 ch 96 SLA 1998; am § 1 ch 169 SLA 2004)

Revisor’s notes. —

Subsection (d) was enacted as (e) and relettered in 2004, at which time what was formerly subsection (d) was relettered as (e).

Cross references. —

Under § 3, ch. 169, SLA 2004, the provisions of (d) of this section apply only to causes of action that accrue on or after October 24, 2004.

Editor’s notes. —

Section 2, ch. 169, SLA 2004 provides that the 2004 enactment of subsection (e) (now (d)) has the effect of amending Rules 54(d), 79, and 82, Alaska Rules of Civil Procedure, by establishing rules for the award of actual attorney fees and costs in certain actions relating to unfair trade practices that are brought under AS 45.50.471 45.50.561 , to the extent those fees and costs are reasonable.

Notes to Decisions

Broad discretion to determine fees. —

The full reasonable fee provision in subsection (a) gave the superior court broad discretion to determine whether plaintiffs’ proposed fees were reasonable under the totality of the circumstances; the superior court reduced the amount plaintiffs’ requested by 20 percent to reflect the fees that it believed to be reasonable based on its own observations. Kenai Chrysler Ctr., Inc. v. Denison, 167 P.3d 1240 (Alaska 2007).

Proper method. —

Alaska courts should employ the modified lodestar method when determining full reasonable attorney fees under Alaska's Unfair Trade Practices and Consumer Protection Act's fee-shifting provision. Adkins v. Collens, 444 P.3d 187 (Alaska 2019), cert. denied, — U.S. —, 140 S. Ct. 2508, 206 L. Ed. 2d 463 (U.S. 2020).

Enhanced attorney fees denied. —

Trial court erred in awarding enhanced attorney fees to a mortgagee where the mortgagor’s claims regarding the inclusion of foreclosure costs in a reinstatement quote were not frivolous. Albrecht v. Alaska Tr., LLC, 286 P.3d 1059 (Alaska 2012).

Full award authorized. —

Trial court properly awarded full attorney fees in excess of $25,000 against a lender who failed to serve a borrower with an exemption packet as required under the Unfair Trade Practices Act and the Alaska Exemption Act, even though the borrower recovered only $594 in damages and was represented by legal aid attorneys. The court was not limited by the requirements of Alaska R. Civ. P. 82. NCO Fin. Sys. v. Ross, — P.3d — (Alaska Apr. 11, 2012) (memorandum decision).

Upon a jury’s finding that a vehicle dealer had committed a material misrepresentation, a consumer was entitled to attorney fees and to treble damages under AS 45.50.531(a) . Borgen v. A&M Motors, Inc., 273 P.3d 575 (Alaska 2012).

Award reversed. —

Attorney's fee award under the Unfair Trade Practices and Consumer Protection Act was reversed because (1) a modified lodestar method applied, and (2) the trial court did not calculate a baseline award by approximating hours reasonably worked multiplied by a reasonable hourly rate. Adkins v. Collens, 444 P.3d 187 (Alaska 2019), cert. denied, — U.S. —, 140 S. Ct. 2508, 206 L. Ed. 2d 463 (U.S. 2020).

Cited in

Garrison v. Dixon, 19 P.3d 1229 (Alaska 2001); Casciola v. F. S. Air Serv., 120 P.3d 1059 (Alaska 2005); Compton v. Kittleson, 171 P.3d 172 (Alaska 2007); Neese v. State, 218 P.3d 983 (Alaska 2009); Pepper v. Routh Crabtree, APC, 219 P.3d 1017 (Alaska 2009); Cook v. Quashnick, 485 P.3d 1026 (Alaska 2021).

Sec. 45.50.541. Nonnegotiability of consumer paper.

  1. If a contract for sale or lease of consumer goods or services on credit entered into between a retail seller and a retail buyer requires or involves the execution of a promissory note or instrument or other evidence of indebtedness of the buyer, the note, instrument, or evidence of indebtedness shall have printed on its face the words “consumer paper,” and the note, instrument, or evidence of indebtedness with the words “consumer paper” printed on it is not a negotiable instrument, within the meaning of AS 45.01 — AS 45.08, AS 45.12, AS 45.14, and AS 45.29 (Uniform Commercial Code).
  2. Notwithstanding the absence of such a notice on a note, instrument, or evidence of indebtedness arising out of a consumer credit sale or consumer lease as described in this section, an assignee of the rights of the seller or lessor is subject to all claims and defenses of the buyer or lessee against the seller or lessor arising out of the sale or lease.  An agreement to the contrary has no effect in limiting the rights of a consumer.
  3. The assignee’s liability under this section may not exceed the amount owing to the assignee at the time the claim or defense is asserted against the assignee.

History. (§ 2 ch 246 SLA 1970)

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.

In 2000, “AS 45.01 — AS 45.08, AS 45.12, AS 45.14, and AS 45.29” was substituted for “AS 45.01 — AS 45.09, AS 45.12, and AS 45.14” in accordance with § 35, ch. 113, SLA 2000.

Notes to Decisions

Stated in

Bendix Home Sys. v. Jessop, 644 P.2d 843 (Alaska 1982).

Sec. 45.50.542. Provisions not waivable.

A waiver by a consumer of the provisions of AS 45.50.471 45.50.561 is contrary to public policy and is unenforceable and void.

History. (§ 7 ch 53 SLA 1974)

Notes to Decisions

Voluntary payment doctrine cannot be applied. —

In light of AS 45.50.542 , the court predicted that the Alaska Supreme Court would hold that the voluntary payment doctrine (VPD), which is a common law defense that, if applied, would essentially amount to a waiver of the protections of the Alaska Unfair Trade Practices and Consumer Protection Act (UTPCPA), would be against public policy and thus would not be a viable defense to plaintiff's UTPCPA claim. Van v. LLR, Inc., 523 F. Supp. 3d 1077 (D. Alaska 2021).

Sec. 45.50.545. Interpretation.

In interpreting AS 45.50.471 due consideration and great weight should be given the interpretations of 15 U.S.C. 45(a)(1) (§ 5(a)(1) of the Federal Trade Commission Act).

History. (§ 8 ch 53 SLA 1974)

Notes to Decisions

The Federal Fair Debt Practices Act, 15 U.S.C. §§ 1692-1692o, expands already existing Federal Trade Commission jurisdiction over unfair or deceptive acts and practices of collection agencies; it is not written on a clean slate. The Federal Trade Commission’s prior exercise of jurisdiction in this area is entitled to great weight, and leads to the conclusion that the new act merely supplements the old. State v. O'Neill Investigations, 609 P.2d 520 (Alaska 1980) (15 U.S.C. § 1692p was added in 2006).

Consideration of federal law mandated in interpreting the Alaska Unfair Trade Practices and Consumer Protection Act does not require that Alaska precedent be disregarded when changes to federal law conflict with it; thus, a jury instruction based on Alaska case law was proper. ASRC Energy Servs. Power & Communs.. LLC v. Golden Valley Elec. Ass'n, 267 P.3d 1151 (Alaska 2011).

Consumer’s misrepresentation claim under AS 45.50.471(b)(12) was not subject to a good-faith defense; this section governs the interpretation of the Alaska UTPA, and requires that due consideration and great weight should be accorded federal precedent interpreting 15 U.S.C.S. § 45(a)(1) to preclude a good-faith defense. Borgen v. A&M Motors, Inc., 273 P.3d 575 (Alaska 2012).

Quoted in

Matanuska Maid v. State, 620 P.2d 182 (Alaska 1980).

Sec. 45.50.551. Civil penalties.

  1. A person who violates the terms of an injunction or restraining order issued under AS 45.50.501 shall forfeit and pay to the state a civil penalty of not more than $50,000 for each violation. For the purposes of this section, the superior court in a judicial district issuing an injunction retains jurisdiction, and, in these cases, the attorney general acting in the name of the state may petition for recovery of the penalties.
  2. In an action brought under AS 45.50.501 , if the court finds that a person is using or has used an act or practice declared unlawful by AS 45.50.471 , the attorney general, upon petition to the court, may recover, on behalf of the state, a civil penalty of not less than $1,000 and not more than $25,000 for each violation.
  3. [Repealed by § 21 ch 166 SLA 1978.]

History. (§ 2 ch 246 SLA 1970; am § 9 ch 53 SLA 1974; am § 21 ch 166 SLA 1978; am §§ 1, 2 ch 98 SLA 2006)

Editor’s notes. —

Section 3, ch. 98, SLA 2006, provides that the 2006 amendments of (a) and (b) of this section apply “to all penalties assessed on or after October 31, 2006, regardless of when the conduct occurred.”

Notes to Decisions

Cited in

Casciola v. F. S. Air Serv., 120 P.3d 1059 (Alaska 2005).

Sec. 45.50.561. Definitions; short title.

  1. In AS 45.50.471 45.50.561
    1. “advertising” includes the attempt directly or indirectly by publication, dissemination, solicitation, endorsement, or circulation, display in any manner, including solicitation or dissemination by mail, telephone or door-to-door contacts, or in any other way, to induce directly or indirectly a person to enter or not enter into an obligation or acquire title or interest in any merchandise or to increase the consumption of it or to make a loan;
    2. “cemetery lot” means a lot, plot, space, grave, niche, mausoleum, crypt, vault, or columbarium, used or intended to be used for the interment of human remains;
    3. “chain distributor scheme” means a sales device whereby a person, upon condition that the person make an investment, is granted a license or right to solicit or recruit for profit one or more additional persons who are also granted a license or right upon condition of making an investment and may further perpetuate the chain of persons who are granted a license or right upon the condition of investment; a limitation as to the number of persons who may participate, or the presence of additional conditions affecting eligibility for the license or right to solicit or recruit or the receipt of profit from these does not change the identity of the scheme as a chain distributor scheme; as used in this paragraph, “investment” means acquisition, for a consideration other than personal services, of tangible or intangible property, and includes franchises, business opportunities, and services; “investment” does not include sales demonstration equipment and materials furnished at cost for use in making sales and not for resale;
    4. “consumer” means a person who seeks or acquires goods or services by lease or purchase;
    5. “dealing in hearing aids” has the meaning given in AS 08.55.200 ;
    6. “documentary material” means the original or a copy of a book, record, report, memorandum, paper, communication, tabulation, map, chart, photograph, mechanical transcription, or other tangible document or recording, wherever situate;
    7. “examination” of documentary material includes the inspection, study, or copying of the material, and the taking of testimony under oath or acknowledgment in respect of documentary material or copy of it;
    8. “fresh” means a condition of food that has never been frozen;
    9. “goods or services” includes goods or services provided in connection with a consumer credit transaction or with a transaction involving an indebtedness secured by the borrower’s residence;
    10. “hearing aid” has the meaning given in AS 08.55.200 ;
    11. “knowingly” means actual awareness of the falsity or deception, but actual awareness may be inferred where objective manifestations indicate that a person acted with actual awareness;
    12. “seconds” means manufactured items having flaws or consisting of a standard quantity or quality less than the manufacturer’s quality standard.
  2. AS 45.50.471 45.50.561 may be cited as the Alaska Unfair Trade Practices and Consumer Protection Act.

History. (§ 2 ch 246 SLA 1970; am § 10 ch 53 SLA 1974; am § 2 ch 138 SLA 1974; am § 13 ch 107 SLA 1984; am § 13 ch 131 SLA 1986; am § 66 ch 35 SLA 2003; am § 9 ch 55 SLA 2004; am § 40 ch 3 SLA 2017)

Revisor’s notes. —

Reorganized in 1984, 1986, and 2004 to alphabetize the defined terms.

Administrative Code. —

For retail advertising, see 9 AAC 5.

Effect of amendments. —

The 2017 amendment, effective July 1, 2017, in (3), deleted “but is not limited to” following “tangible or intangible property, and includes”.

Notes to Decisions

Applied in

State v. First Nat'l Bank, 660 P.2d 406 (Alaska 1982).

Cited in

Kenai Chrysler Ctr., Inc. v. Denison, 167 P.3d 1240 (Alaska 2007).

Article 4. Monopolies; Restraint of Trade.

Legislative history reports. —

For report of the Senate Judiciary Committee on ch. 53, SLA 1975 (HCS CSSSSB 5 am H), which enacted this article, see 1975 Senate Journal, pp. 598-599.

Notes to Decisions

Use of federal cases in construing article. —

The legislature intended that Alaska courts would look to cases decided under the Sherman Act, 15 U.S.C. § 1 et seq. in construing AS 45.50.562 through 45.50.596 . West v. Whitney-Fidalgo Seafoods, 628 P.2d 10 (Alaska 1981).

Due process in exercising right of judicial review. —

Since a petition to modify or set aside the investigative demand automatically tolls the penalty provisions of subsection (g) of this section, it cannot be said that appellants exercise the right of judicial review only at the risk of incurring severe penalties. Appellants were accorded a statutory right to challenge the validity of the state’s investigative demand and this is all that due process requires. That appellants must initiate such proceedings does not indicate otherwise. Matanuska Maid v. State, 620 P.2d 182 (Alaska 1980), overruled in part, Rosen v. State Bd. of Pub. Accountancy, 689 P.2d 478 (Alaska 1984).

Inadequate notice. —

An investigative demand issued to appellants failed to adequately apprise them of their right to challenge the demand or to inform them of a procedure for affecting such a challenge when the only notice of such rights contained in the demand was an excerpt from subsection (g) of this section. Matanuska Maid v. State, 620 P.2d 182 (Alaska 1980), overruled in part, Rosen v. State Bd. of Pub. Accountancy, 689 P.2d 478 (Alaska 1984).

Fourth amendment requirements for issuance of subpoena. —

A demand for documents may be issued without prior judicial review, and it is sufficient for 4th amendment purposes that the subpoena is issued pursuant to lawful authority, relevant to the inquiry for which it is issued, and contains adequate specification of the documents to be produced. Matanuska Maid v. State, 620 P.2d 182 (Alaska 1980), overruled in part, Rosen v. State Bd. of Pub. Accountancy, 689 P.2d 478 (Alaska 1984).

No conflict between subsection (f) and Civ. R. 91(c). —

There is no conflict between subsection (f) of this section and Civ. R. 91(c), which merely states that if a proceeding to compel production to enforce an administrative subpoena is brought the civil rules shall apply, because the hearing in the present case was not a proceeding in court to compel production but was rather a hearing to modify or set aside the investigative demand. Matanuska Maid v. State, 620 P.2d 182 (Alaska 1980), overruled in part, Rosen v. State Bd. of Pub. Accountancy, 689 P.2d 478 (Alaska 1984).

Thus, investigative demand procedure does not conflict with Alaska Const., art. IV, § 15. —

The investigative demand procedure set forth in AS 45.50.590 and this section does not conflict with the rulemaking power vested in the Supreme Court by Alaska Const., art. IV, § 15, insofar as it involves hearings to modify or set aside investigative demands and not proceedings to compel production of document. Matanuska Maid v. State, 620 P.2d 182 (Alaska 1980), overruled in part, Rosen v. State Bd. of Pub. Accountancy, 689 P.2d 478 (Alaska 1984).

Investigation of acts violating both this article and article 3 of chapter. —

Although it does not necessarily follow that an act that violates the Unfair Trade Practices and Consumer Protection Act, AS 45.50.471 45.50.561 , would also violate the Restraint of Trade Act, AS 45.50.562 45.50.596 , if an act does violate both statutes, an investigation pursuant to AS 45.50.495 would be appropriate. Matanuska Maid v. State, 620 P.2d 182 (Alaska 1980), overruled in part, Rosen v. State Bd. of Pub. Accountancy, 689 P.2d 478 (Alaska 1984).

Sec. 45.50.562. Combinations in restraint of trade unlawful.

Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce is unlawful.

History. (§ 1 ch 53 SLA 1975)

Revisor’s notes. —

Formerly AS 45.52.010. Renumbered in 1980.

Notes to Decisions

Federal law. —

Reviewing courts use federal law as a guide when considering claims brought under this section. Alakayak v. B.C. Packers, Ltd., 48 P.3d 432 (Alaska 2002).

Discussion of tariff terms by shippers. —

Discussions between shippers that may lead to an agreement concerning the interpretation and application of a tariff do not constitute price fixing and do not violate the prohibition against restraints of trade set forth in this section, as adherence to prices set by tariff is mandated by federal and state statutes. KOS ex rel. Sourdough Freight Lines v. Alyeska Pipeline Serv. Co., 676 P.2d 1069 (Alaska 1983).

A common motor carrier may not recover treble damages for violation of this section when shippers in a certain geographical area have jointly discussed tariff terms and have refused to pay some of the same charges in bills submitted by the carrier where such a situation amounts to a simple tariff dispute, which is not intended to, nor does it, affect competition within the motor carrier industry in that particular area. KOS ex rel. Sourdough Freight Lines v. Alyeska Pipeline Serv. Co., 676 P.2d 1069 (Alaska 1983).

Setting high prices is not prohibited. —

An increase in prices, subsequent to the execution of a settlement release of all claims of unlawful monopolistic activities, does not constitute an unlawful act which gives rise to a new actionable claim. Petroleum Sales v. Mapco Alaska, 687 P.2d 923 (Alaska 1984).

Abuse of discretion. —

The superior court improperly dismissed plaintiff anesthesiologist’s claims resulting from the termination of his privileges at defendant hospital where his complaint alleged facts which, if proven, were sufficient to state a claim for unreasonable restraint of trade, group boycott, attempted monopolization, unfair trade practices, defamation, breach of oral contract, interference with a prospective economic advantage, and intentional infliction of emotional distress. Odom v. Fairbanks Mem. Hosp., 999 P.2d 123 (Alaska 2000).

Hospital anesthesiology practices. —

Plaintiff presented sufficient evidence to establish prima facie statutory causes of action against the defendant doctors where a jury could have found that the defendants had engaged in a conspiracy to restrain trade, had attempted to monopolize the anesthesiology practice at a hospital, and had engaged in trade practices the effect of which was substantially to lessen competition or tend to create a monopoly in the anesthesiology practice at the hospital. Odom v. Lee, 999 P.2d 755 (Alaska 2000).

Evidence was sufficient to establish doctor’s restraint of trade case against a hospital and pain management group where the doctor presented evidence of serious understaffing in the group, relevant testimony demonstrated that one or more members of the group were motivated more by profit concerns than with patients’ pain, and a former group doctor testified that, in his opinion, the exclusive contracts reduced choices to patients without any added benefit. Sisters of Providence in Wash. v. A.A. Pain Clinic, Inc., 81 P.3d 989 (Alaska 2003).

Lost profits. —

Evidence was sufficient to sustain an award of damages for lost profits in doctors’ restraint of trade action where they presented evidence of losses stemming from one doctor’s exclusion from the hospital and his inability to freely treat patients there, losses resulting from a loss of pain management patient referrals due to interference by the hospital, and losses resulting from the referral of only Medicare, Medicaid and other low paying or nonpaying patients. Sisters of Providence in Wash. v. A.A. Pain Clinic, Inc., 81 P.3d 989 (Alaska 2003).

Unlawful use of monopsony power to effectuate pricing scheme not found, where there was no evidence of anything other than the interpretation of correct tariffs. KOS ex rel. Sourdough Freight Lines v. Alyeska Pipeline Serv. Co., 676 P.2d 1069 (Alaska 1983).

Standing. —

The plaintiff had no standing to raise antitrust claims where it did not show a causal relationship between the allegedly anti-competitive conduct and the alleged damage. Aloha Lumber Corp. v. University of Alaska, 994 P.2d 991 (Alaska 1999).

Where an airline customer brought both class and individual claims against an airline under the Alaska Unfair Trade Practices Act, AS 45.50.471 , and state antitrust law, this section and AS 45.50.564 , based on its standard ticket terms and policies, the superior court properly dismissed the claim; as a pro se litigant, the customer could not bring an action on behalf of the class, while the customer’s individual claims were preempted by the Airline Deregulation Act, 49 U.S.C.S. § 41713. Hallam v. Alaska Airlines, Inc., 91 P.3d 279 (Alaska 2004).

Summary judgment denied. —

Summary judgment was improper in an antitrust action against salmon importers; evidence of telephone calls and price verifications made by defendants created an issue of fact as to the existence of a price-fixing conspiracy. Alakayak v. B.C. Packers, Ltd., 48 P.3d 432 (Alaska 2002).

Quoted in

West v. Whitney-Fidalgo Seafoods, 628 P.2d 10 (Alaska 1981); Betz v. Chena Hot Springs Group, 742 P.2d 1346 (Alaska 1987).

Cited in

Anchorage v. Hitachi Cable, Ltd., 547 F. Supp. 633 (D. Alaska 1982); Lake & Peninsula Borough v. Norquest Seafoods, Inc., 42 P.3d 521 (Alaska 2002).

Sec. 45.50.564. Monopolies and attempted monopolies unlawful.

It is unlawful for a person to monopolize, or attempt to monopolize, or combine or conspire with another person to monopolize any part of trade or commerce.

History. (§ 1 ch 53 SLA 1975)

Revisor’s notes. —

Formerly AS 45.52.020. Renumbered in 1980.

Notes to Decisions

This section is based on § 2 of the Sherman Antitrust Act, 15 U.S.C. § 2. West v. Whitney-Fidalgo Seafoods, 628 P.2d 10 (Alaska 1981).

Setting high prices is not prohibited. —

An increase in prices, subsequent to the execution of a settlement release of all claims of unlawful monopolistic activities, does not constitute an unlawful act which gives rise to a new actionable claim. Petroleum Sales v. Mapco Alaska, 687 P.2d 923 (Alaska 1984).

Federal law preempts litigant’s standing in state class action. —

Where a customer brought both class and individual claims against an airline under the Alaska Unfair Trade Practices Act, AS 45.50.471 , and state antitrust law, this section and AS 45.50.562 , based on its standard ticket terms and policies, the superior court properly dismissed the claim; as a pro se litigant, the customer could not bring an action on behalf of the class, while the customer’s individual claims were preempted by the Airline Deregulation Act, 49 U.S.C.S. § 41713. Hallam v. Alaska Airlines, Inc., 91 P.3d 279 (Alaska 2004).

Unlawful use of monopsony power to effectuate pricing scheme not found, where there was no evidence of anything other than interpretation of correct tariffs. KOS ex rel. Sourdough Freight Lines v. Alyeska Pipeline Serv. Co., 676 P.2d 1069 (Alaska 1983).

Abuse of discretion. —

The superior court improperly dismissed plaintiff anesthesiologist’s claims resulting from the termination of his privileges at defendant hospital where his complaint alleged facts which, if proven, were sufficient to state a claim for unreasonable restraint of trade, group boycott, attempted monopolization, unfair trade practices, defamation, breach of oral contract, interference with a prospective economic advantage, and intentional infliction of emotional distress. Odom v. Fairbanks Mem. Hosp., 999 P.2d 123 (Alaska 2000).

Hospital anesthesiology practices. —

Plaintiff presented sufficient evidence to establish prima facie statutory causes of action against the defendant doctors where a jury could have found that the defendants had engaged in a conspiracy to restrain trade, had attempted to monopolize the anesthesiology practice at a hospital, and had engaged in trade practices the effect of which was substantially to lessen competition or tend to create a monopoly in the anesthesiology practice at the hospital. Odom v. Lee, 999 P.2d 755 (Alaska 2000).

Quoted in

Betz v. Chena Hot Springs Group, 742 P.2d 1346 (Alaska 1987).

Cited in

Anchorage v. Hitachi Cable, Ltd., 547 F. Supp. 633 (D. Alaska 1982); Spence v. Southeastern Alaska Pilots' Ass'n, 789 F. Supp. 1014 (D. Alaska 1992); Sisters of Providence in Wash. v. A.A. Pain Clinic, Inc., 81 P.3d 989 (Alaska 2003).

Sec. 45.50.566. Transactions and agreements not to use or deal in commodities or services unlawful.

It is unlawful for a person to lease or make a sale or contract for sale of goods, wares, merchandise, machinery, supplies, or other commodities, or services, whether patented or unpatented, for use, consumption, enjoyment, or resale, or fix a price charged for it, or discount from, or rebate upon, that price, on the condition, agreement, or understanding that the lessee or purchaser will not use or deal in the goods, wares, merchandise, machinery, supplies, or other commodity or service of a competitor or competitors of the lessor or seller, if the effect of the lease, sale, or contract for sale, or of the condition, agreement, or understanding may be substantially to lessen competition or tend to create a monopoly in any line of commerce.

History. (§ 1 ch 53 SLA 1975)

Revisor’s notes. —

Formerly AS 45.52.030. Renumbered in 1980.

Notes to Decisions

Setting high prices is not prohibited. —

An increase in prices, subsequent to the execution of a settlement release of all claims of unlawful monopolistic activities, does not constitute an unlawful act which gives rise to a new actionable claim. Petroleum Sales v. Mapco Alaska, 687 P.2d 923 (Alaska 1984).

Sec. 45.50.568. Mergers and acquisitions unlawful when competition lessened.

  1. It is unlawful for a person to acquire and hold, directly or indirectly, the whole or a part of the stock, or other share capital, or assets of any corporation after August 5, 1975 if the effect of the acquisition and holding may be substantially to lessen competition or to tend to create a monopoly in any line of commerce in the state or in a section of the state. This subsection does not apply to persons purchasing such stock solely for investment if it is not used by voting or otherwise to bring about, or in attempting to bring about, the substantial lessening of competition.  Nothing in this subsection prevents a corporation from causing the formation of subsidiary corporations for the actual carrying on of their immediate lawful business, or the natural and legitimate branches or extensions of it, or from owning and holding all or a part of the stock of the subsidiary corporation, when the effect of the formation is not substantially to lessen competition.
  2. When the court finds that the effect of the holding of such stock, share capital, or assets is substantially to lessen competition or tends to create a monopoly and no other remedy will eliminate the lessening of competition or the tendency to create a monopoly, the court shall order the divestiture or other disposition of the stock, share capital, or assets and shall prescribe a reasonable time, manner, and degree of the divestiture or other disposition of it.
  3. This section does not apply to mergers, acquisitions, or holding companies permitted by AS 06.05.235 or to a merger carried out in accordance with AS 21.69.590 21.69.600 , or to mergers, acquisitions, or holding companies permitted and regulated by a regulatory agency of the United States having jurisdiction and control over those mergers and acquisitions.

History. (§ 1 ch 53 SLA 1975)

Revisor’s notes. —

Formerly AS 45.52.040. Renumbered in 1980.

Sec. 45.50.570. Interlocking directorates and relationships.

  1. It is unlawful for a person to be at the same time a director, officer, partner, or trustee in any two or more firms, partnerships, trusts, associations, or corporations or any combination of them engaged in commerce, if these firms, partnerships, trusts, associations, or corporations or a combination of them, are by virtue of their business and location or operation, competitors and if the effect may be substantially to lessen competition or tend to create a monopoly.
  2. A person may not by the use of a representative accomplish the result prohibited in (a) of this section.
  3. The validity or invalidity of an act of a director, officer, or trustee done by the director, officer, or trustee while occupying the position in violation of this section shall be determined by the statutory and common law of the state relating to corporations, trusts, or associations.
  4. The attorney general may bring an action at any time to cause a director, officer, or trustee who may be occupying such a position in violation of this section to vacate the office or offices to effect the termination of the prohibited interlocking relationship.
  5. A person affected by an act of a director, officer, or trustee may bring an action at any time to cause the director, officer, or trustee who may be occupying the position in violation of this section to terminate the prohibited interlocking relationship.
  6. The court, upon finding that a director, officer, or trustee is holding office in violation of this section, shall order the person to terminate the interlocking relationship, and, in the case of a trustee, the court may, when it considers it appropriate, order the trustee to vacate the office of the trustee. A remedy provided in this section does not limit and is in addition to any other remedy available under another section of this chapter or another law.

History. (§ 1 ch 53 SLA 1975)

Revisor’s notes. —

Formerly AS 45.52.050. Renumbered in 1980.

Sec. 45.50.572. Exemptions.

  1. AS 45.50.562 45.50.596 do not forbid the existence or operation of labor, agricultural, horticultural, or marine pilot organizations created for the purpose of mutual help, and not conducted for profit, or forbid or restrain members of those organizations from lawfully carrying out the legitimate objectives of them; nor are these organizations or members illegal combinations or conspiracies in restraint of trade under the provisions of  AS 45.50.562 45.50.596 .
  2. AS 45.50.562 45.50.596 do not forbid actions or arrangements authorized or regulated under the laws of the United States that exempt these actions or arrangements from application of the antitrust laws of the United States or under the following statutes of this state:
    1. AS 06.05.235 and 06.05.570 ;
    2. AS 10.15; and
    3. AS 31.05.110 .
  3. AS 45.50.562 45.50.596 do not forbid persons engaged in the fishing industry as fishermen who catch, collect, or cultivate aquatic products from acting together in associations for the purpose of collectively catching, producing, preparing for market, processing, handling, and marketing their product. Associations may have marketing agencies in common and may make contracts and agreements necessary to achieve the purposes of this subsection. In this subsection, “association” means an association, corporate or otherwise, with or without capital stock, that
    1. is operated for the mutual benefit of its members;
    2. does not deal in the aquatic products of nonmembers to an amount greater in value than the association handles for its members; and
    3. either
      1. does not allow a member of the association more than one vote because of the amount of stock or membership capital the member may own in the association; or
      2. does not pay dividends on stock or membership capital in excess of eight percent a year.
  4. AS 45.50.562 45.50.596 apply to long distance telecommunications services provided by public utilities.  AS 45.50.562 45.50.596 do not apply to other services provided by public utilities that have been issued a certificate of public convenience and necessity under  AS 42.05.
  5. [Repealed, § 68 ch 21 SLA 1985.]
  6. [Repealed, § 10 ch 75 SLA 1982.]
  7. AS 45.50.562 45.50.596 do not forbid activities expressly required by a regulatory agency of the state. Activities permitted by a regulatory agency of the state are not forbidden by this chapter if the regulatory agency has given due consideration to the possible anticompetitive effects before permitting the activities, and enforcement of the provisions of  AS 45.50.562 45.50.596 would be disruptive of the regulatory scheme.
  8. AS 45.50.562 45.50.596 do not forbid actions or arrangements necessary to carry out the provisions of the Alaska Native Claims Settlement Act.
  9. AS 45.50.562 45.50.596 do not prohibit activities of the Alaska Housing Finance Corporation to stabilize the market price of and demand for residential housing in the state under  AS 18.56.210 .
  10. AS 45.50.562 45.50.596 do not forbid persons engaged in the fishing industry as fishermen, including fishermen acting through associations allowed under (c) of this section, from collectively agreeing with fish processors, including fish processors acting through associations of processors, on the (1) price paid to the fishermen for aquatic products; and (2) minimum price that fish processors will accept for the sale of processed aquatic products. Nothing in this subsection allows fish processors to agree among themselves on the price paid to fishermen or the minimum price that fish processors will accept for the sale of processed aquatic products if fishermen did not participate in the making of the agreement and are not a party to the agreement.
  11. AS 45.50.562 45.50.596 do not apply to action taken by a person to comply with  AS 45.25 or to action refrained from by a person in order to comply with  AS 45.25 (motor vehicle transactions).
  12. AS 45.50.562 45.50.596 do not forbid the existence or operation of organizations of physicians acting in accordance with  AS 23.50, or forbid or restrain members of those organizations from lawfully carrying out the legitimate objectives of them; nor are these organizations or members illegal combinations or conspiracies in restraint of trade under the provisions of  AS 45.50.562 45.50.596 .

History. (§ 1 ch 53 SLA 1975; am § 10 ch 75 SLA 1982; am § 68 ch 21 SLA 1985; am § 3 ch 147 SLA 1988; am § 6 ch 93 SLA 1990; am § 29 ch 89 SLA 1991; am § 101 ch 26 SLA 1993; am §§ 1, 2 ch 45 SLA 1995; am § 2 ch 68 SLA 2002; am § 12 ch 79 SLA 2002)

Revisor’s notes. —

Formerly AS 45.52.060. Renumbered in 1980.

Subsection ( l ) was enacted as (k) and relettered in 2002.

Editor’s notes. —

Section 15, ch. 79, SLA 2002, provides that subsection (k) applies to a franchise that is entered into on or after July 1, 2002.

Sec. 45.50.574. Contracts voidable.

A contract or agreement in violation of a provision of AS 45.50.562 45.50.596 is voidable by either party as to future performance by either party; however, the court may, in its discretion, order payment for goods or services already received to prevent unjust enrichment.

History. (§ 1 ch 53 SLA 1975)

Revisor’s notes. —

Formerly AS 45.52.100. Renumbered in 1980.

Sec. 45.50.576. Suits by persons injured; treble damages; costs.

  1. A person who is injured in business or property by a violation of AS 45.50.562 45.50.570 , or a person so injured because the person refuses to accede to a proposal for an arrangement that, if consummated, would be a violation of AS 45.50.562 45.50.570 , may bring a civil action
    1. for damages sustained by the person, and, if the judgment is for the plaintiff, the plaintiff shall be awarded three times the amount of damages sustained by the person, plus the costs of the suit, including reasonable attorney fees; and
    2. to enjoin the unlawful practice, and, if the judgment is for the plaintiff, the plaintiff may be awarded costs of the suit, including reasonable attorney fees.
  2. If a home rule or general law city or borough or other governmental entity is injured by reason of a violation of AS 45.50.562 45.50.570 , it may maintain an action in the same manner as prescribed in (a) of this section for an injured person, and the city, borough, or other governmental entity is entitled to the same relief as provided in (a) of this section.
  3. In a civil action brought under AS 45.50.562 45.50.570 , if judgment is for the defendant, the defendant shall be awarded the defendant’s costs of the suit, including reasonable attorney fees in accordance with rules adopted by the supreme court for awarding costs and attorney fees to prevailing parties in civil actions. If the plaintiff in a civil action brought under this section in which judgment is for the defendant is a class certified under Rule 23, Alaska Rules of Civil Procedure, any award of costs and attorney fees to the defendant
    1. may be satisfied only through funds, if any, that the class has collected from settlements with or judgments against other defendants; and
    2. is not a liability of any individual member of the class.

History. (§ 1 ch 53 SLA 1975; am § 2 ch 19 SLA 2003; am § 1 ch 104 SLA 2003; am § 41 ch 3 SLA 2017)

Revisor’s notes. —

Formerly AS 45.52.110. Renumbered in 1980.

Cross references. —

Section § 1, ch. 19, SLA 2003, found in the 2003 Temporary and Special Acts, states that subsection (c) “is intended to clarify and express the intent of existing law.”

Effect of amendments. —

The 2017 amendment, effective July 1, 2017, in (a)(1), substituted “awarded three times the amount” for “awarded threefold the amount” following “the plaintiff shall be”.

Editor’s notes. —

Section 4, ch. 104, SLA 2003, provides that the 2003 amendments to subsections (a) and (b) made by § 1, ch. 104, SLA 2003 apply “to civil actions alleging a violation of AS 45.50.562 45.50.570 that occurred on or after July 1, 2003.”

Legislative history reports. —

For governor’s transmittal letter for ch. 104, SLA 2003 (House Bill 225), amending this section, see 2003 House Journal 676 — 677.

Notes to Decisions

Standing to bring suit for treble damages. —

A private litigant seeking treble damages for violation of the antitrust laws must establish that it has standing to bring suit. KOS ex rel. Sourdough Freight Lines v. Alyeska Pipeline Serv. Co., 676 P.2d 1069 (Alaska 1983).

To bring suit for treble damages, a plaintiff must show not only the fact of injury from the alleged violation, but that the injury is of the type the antitrust laws are intended to prevent and that flows from that which makes the defendants’ acts unlawful. KOS ex rel. Sourdough Freight Lines v. Alyeska Pipeline Serv. Co., 676 P.2d 1069 (Alaska 1983).

Taxation of settlement proceeds. —

Settlement between fishers and fish processors did not compensate the fishers for underpayment on specific sales of fish, but rather, compensated them for economic losses incurred because of the alleged conspiracy of the processors to set artificially low prices; as neither the basic allegations of the antitrust action nor the actual provisions of the disputed settlement corresponded to any particular sale within the borough, no basis existed for characterizing the settlement money as a post-season adjustment to taxable sales. Lake & Peninsula Borough v. Norquest Seafoods, Inc., 42 P.3d 521 (Alaska 2002).

Treble damages not recoverable. —

A common motor carrier may not recover treble damages for violation of AS 45.50.562 , which prohibits conspiracies to fix prices, when shippers in a certain geographical area have jointly discussed tariff terms and have refused to pay some of the same charges in bills submitted by the carrier where such a situation amounts to a simple tariff dispute that is not intended to, nor does it, affect competition within the motor carrier industry in that particular area. KOS ex rel. Sourdough Freight Lines v. Alyeska Pipeline Serv. Co., 676 P.2d 1069 (Alaska 1983).

In a doctor’s antitrust case against a hospital, because he only prevailed on common law claims, he was not entitled to recovery under the full reasonable fees standard of paragraph (a)(1) of this section; rather, under Alaska R. Civ. P. 82, he was only entitled to an award of partial fees. Sisters of Providence in Wash. v. A.A. Pain Clinic, Inc., 81 P.3d 989 (Alaska 2003).

Applied in

Petroleum Sales v. Mapco Alaska, 687 P.2d 923 (Alaska 1984).

Quoted in

West v. Whitney-Fidalgo Seafoods, 628 P.2d 10 (Alaska 1981).

Sec. 45.50.577. Enforcement by attorney general.

  1. The attorney general may bring a civil action in superior court to secure monetary relief as provided in this section on behalf of the state and its agencies injured either directly or indirectly by reason of any violation of AS 45.50.562 45.50.570 .
  2. The attorney general may bring a civil action in superior court in the name of the state, as parens patriae on behalf of governmental entities or persons doing business or residing in this state, to secure monetary relief as provided in this section for injuries directly or indirectly sustained by persons by reason of any violation of AS 45.50.562 45.50.570 .
  3. The court shall exclude from the amount of monetary relief awarded in an action under (a) or (b) of this section any amount of monetary relief that
    1. duplicates amounts that have been awarded for the same injury; or
    2. is properly allocable to persons who have excluded their claims under (e) of this section.
  4. The court shall award the attorney general as monetary relief three times the total damage sustained as described in (a) or (b) of this section and, additionally, the costs of the action, including reasonable attorney fees.
  5. In any action brought under (b) of this section, the attorney general, at the times, in the manner, and with the content the court directs, shall cause notice of the action to be given by publication. Any governmental entity or person on whose behalf an action is brought under (b) of this section may elect to exclude from civil action the portion of the state claim for monetary relief attributable to that governmental entity or person by filing notice of the election with the court within the time specified in the attorney general’s notice given in accordance with this subsection.
  6. The final judgment in an action under (a) or (b) of this section is res judicata as to any claim under AS 45.50.576 by any governmental entity or person on whose behalf the action was brought and who fails to give notice of election to exclude under (e) of this section within the period specified in the attorney general’s notice given under (e) of this section.
  7. An action under (b) of this section may not be dismissed or compromised without the approval of the court, and notice of any proposed dismissal or compromise shall be given by publication at the times, in the manner, and with the content the court directs in accordance with (e) of this section and AS 45.50.584 .
  8. Monetary relief recovered in an action under this section shall be (1) distributed in the manner the court, in its discretion, authorizes; or (2) deemed a civil penalty by the court and deposited in the general fund, and may be appropriated to the Alaska permanent fund (AS 37.13.010(a) ) or for any other public purpose. A distribution procedure authorized by the court under this subsection must afford each governmental entity or person participating in the civil action a reasonable opportunity to secure that entity’s or person’s appropriate portion of the net monetary relief.
  9. Only the attorney general, in a suit brought under this section, may seek monetary relief for injury indirectly sustained for a violation of AS 45.50.562 45.50.570 .

History. (§ 2 ch 104 SLA 2003)

Editor’s notes. —

Section 4, ch. 104, SLA 2003, provides that this section “applies to civil actions alleging a violation of AS 45.50.562 45.50.570 that occurred on or after July 1, 2003.”

Legislative history reports. —

For governor’s transmittal letter for ch. 104, SLA 2003 (House Bill 225), adding this section, see 2003 House Journal 676 — 677.

Sec. 45.50.578. Criminal and civil penalties.

  1. A person who violates AS 45.50.562 or 45.50.564 is guilty of a class C felony and upon conviction is punishable,
    1. if a natural person, by a fine of not more than $1,000,000, notwithstanding AS 12.55.035 , or by imprisonment as provided in AS 12.55, or by both; or
    2. if not a natural person, by a fine of not more than $50,000,000, notwithstanding AS 12.55.035 .
  2. In addition to any other relief available, the attorney general may bring a civil action against a person who violates AS 45.50.562 , 45.50.564 , 45.50.568 , or 45.50.570 , or an injunction issued under AS 45.50.580 , for a civil penalty of not more than
    1. $1,000,000 if the person is a natural person;
    2. $50,000,000 if the person is not a natural person.

History. (§ 1 ch 53 SLA 1975; am §§ 1, 2 ch 27 SLA 2011)

Revisor’s notes. —

Formerly AS 45.52.120. Renumbered in 1980.

Effect of amendments. —

The 2011 amendment, effective October 20, 2011, rewrote this section which read, “Certain violations constitute misdemeanor. A person who violates AS 45.50.562 or 45.50.564 is guilty of a misdemeanor and upon conviction is punishable, if a natural person, by a fine of not more than $20,000, or by imprisonment for not more than one year, or by both; and if not a natural person, by a fine of not more than $50,000.”

Sec. 45.50.579. Proof of aggregate damages.

In a civil action brought by the attorney general under AS 45.50.577 , the attorney general may recover aggregate damages by using statistical sampling or sampling methods, by the computation of illegal overcharges, or by a similar, reasonable system of estimating aggregate damages that the court, in its discretion, permits, without the necessity of separately proving the individual claim or amount of damage to governmental entities or persons on whose behalf the civil action was brought.

History. (§ 3 ch 104 SLA 2003)

Editor’s notes. —

Section 4, ch. 104, SLA 2003, provides that this section “applies to civil actions alleging a violation of AS 45.50.562 45.50.570 that occurred on or after July 1, 2003.”

Legislative history reports. —

For governor’s transmittal letter for ch. 104, SLA 2003 (House Bill 225), adding this section, see 2003 House Journal 676 — 677.

Sec. 45.50.580. Injunction by attorney general.

  1. In addition to any other relief provided by AS 45.50.562 45.50.596 , the attorney general may bring an action to enjoin a violation of AS 45.50.562 45.50.596 .  This action may be brought as a sole action or in conjunction with another action that the attorney general is authorized to bring.
  2. The court may make additional orders or judgments as may be necessary to restore to a person in interest any money or property, real or personal, that may have been acquired by an act prohibited by AS 45.50.562 45.50.596 , and as may be necessary to prevent continuing or future violations of AS 45.50.562 45.50.596 .

History. (§ 1 ch 53 SLA 1975)

Revisor’s notes. —

Formerly AS 45.52.130. Renumbered in 1980.

Sec. 45.50.582. Jurisdiction of court.

An action arising under AS 45.50.562 45.50.596 shall be brought in the superior court.

History. (§ 1 ch 53 SLA 1975)

Revisor’s notes. —

Formerly AS 45.52.140. Renumbered in 1980.

Sec. 45.50.584. Consent judgment.

  1. In an action maintained under AS 45.50.562 45.50.596 , the parties to it may file with the court a consent judgment or decree.  The consent judgment or decree shall set out the alleged violations, future obligations of the parties, if any, damages, or other relief, the defendant agrees to make, if any, and the reasons for entering into the consent judgment or decree.
  2. A consent judgment or decree does not become final until 60 days from its filing.  During the 60-day period an interested party may file verified exceptions to the form or substance of the consent judgment or decree, and the court, upon a full hearing on those exceptions, may approve or refuse to enter the consent judgment or decree.

History. (§ 1 ch 53 SLA 1975)

Revisor’s notes. —

Formerly AS 45.52.150. Renumbered in 1980.

Sec. 45.50.586. Judgment in favor of the state as evidence in another action.

A final judgment rendered in a civil or criminal action brought by the state under AS 45.50.562 45.50.596 is prima facie evidence against the defendant in any other action under AS 45.50.562 45.50.596 brought by another party, or by the state, a city, a borough, or other governmental entity; however, this section does not apply to consent judgments or decrees entered under AS 45.50.584 .

History. (§ 1 ch 53 SLA 1975)

Revisor’s notes. —

Formerly AS 45.52.160. Renumbered in 1980.

Sec. 45.50.588. Limitation of actions.

An action to enforce a claim arising under AS 45.50.562 45.50.596 is barred unless commenced within four years after the claim accrues, except that when an action is brought by the attorney general under AS 45.50.562 45.50.596 , the running of this period of limitation, with respect to every private right of action for damages that is based in whole or in part on a matter complained of in the action by the attorney general, shall be suspended during the pendency of the action brought by the attorney general. For the purpose of this section, a claim for a continuing violation is considered to accrue at any time during the period of the violation.

History. (§ 1 ch 53 SLA 1975)

Revisor’s notes. —

Formerly AS 45.52.170. Renumbered in 1980.

Notes to Decisions

Continuing conspiracies. —

In the course of a “continuing conspiracy,” each act of the conspiracy is a separate cause of action that accrues for the plaintiff, and the limitations period starts running on each cause of action as soon as the act is committed. Alakayak v. B.C. Packers, Ltd., 48 P.3d 432 (Alaska 2002).

Stated in

Betz v. Chena Hot Springs Group, 742 P.2d 1346 (Alaska 1987).

Sec. 45.50.590. Powers of the attorney general.

If the attorney general determines, upon complaint or otherwise, that a person has engaged in, or engages in, or is about to engage in an act or practice prohibited or declared unlawful by AS 45.50.562 45.50.596 , or that a person has assisted or participated in a plan, scheme, agreement, or combination of the nature described in AS 45.50.562 45.50.596 , or when the attorney general believes it to be in the public interest, the attorney general may commence an investigation. The attorney general may compel production of documentary material and take testimony, under oath, before the institution of an action under AS 45.50.562 — 45.50.596.

History. (§ 1 ch 53 SLA 1975)

Revisor’s notes. —

Formerly AS 45.52.200. Renumbered in 1980.

Notes to Decisions

Due process in exercising right of judicial review. —

Since a petition to modify or set aside the investigative demand automatically tolls the penalty provisions of subsection (g) of this section, it cannot be said that appellants exercise the right of judicial review only at the risk of incurring severe penalties. Appellants were accorded a statutory right to challenge the validity of the state’s investigative demand and this is all that due process requires. That appellants must initiate such proceedings does not indicate otherwise. Matanuska Maid v. State, 620 P.2d 182 (Alaska 1980), overruled in part, Rosen v. State Bd. of Pub. Accountancy, 689 P.2d 478 (Alaska 1984).

Inadequate notice. —

An investigative demand issued to appellants failed to adequately apprise them of their right to challenge the demand or to inform them of a procedure for affecting such a challenge when the only notice of such rights contained in the demand was an excerpt from subsection (g) of this section. Matanuska Maid v. State, 620 P.2d 182 (Alaska 1980), overruled in part, Rosen v. State Bd. of Pub. Accountancy, 689 P.2d 478 (Alaska 1984).

Fourth amendment requirements for issuance of subpoena. —

A demand for documents may be issued without prior judicial review, and it is sufficient for 4th amendment purposes that the subpoena is issued pursuant to lawful authority, relevant to the inquiry for which it is issued, and contains adequate specification of the documents to be produced. Matanuska Maid v. State, 620 P.2d 182 (Alaska 1980), overruled in part, Rosen v. State Bd. of Pub. Accountancy, 689 P.2d 478 (Alaska 1984).

Thus, investigative demand procedure does not conflict with Alaska Const., art. IV, § 15. —

The investigative demand procedure set forth in AS 45.50.590 and this section does not conflict with the rulemaking power vested in the Supreme Court by Alaska Const., art. IV, § 15, insofar as it involves hearings to modify or set aside investigative demands and not proceedings to compel production of document. Matanuska Maid v. State, 620 P.2d 182 (Alaska 1980), overruled in part, Rosen v. State Bd. of Pub. Accountancy, 689 P.2d 478 (Alaska 1984).

Investigation of acts violating both this article and article 3 of chapter. —

Although it does not necessarily follow that an act that violates the Unfair Trade Practices and Consumer Protection Act, AS 45.50.471 45.50.561 , would also violate the Restraint of Trade Act, AS 45.50.562 45.50.596 , if an act does violate both statutes, an investigation pursuant to AS 45.50.495 would be appropriate. Matanuska Maid v. State, 620 P.2d 182 (Alaska 1980), overruled in part, Rosen v. State Bd. of Pub. Accountancy, 689 P.2d 478 (Alaska 1984).

Sec. 45.50.592. Investigatory demand for documentary evidence.

  1. If the attorney general determines that a person is in possession, custody, or control of documentary evidence, wherever situated, that the attorney general believes to be relevant to an investigation authorized in AS 45.50.590 , the attorney general may execute in writing and cause to be served on that person an investigative demand requiring the person to produce the documentary material, and permit inspection and copying.
  2. Each demand must
    1. state the specific statute the alleged violation of which is under investigation, and the general subject matter of the investigation;
    2. describe, with reasonable specificity so as fairly to indicate the material demanded, the documentary material to be produced;
    3. prescribe a return date within which the documentary material is to be produced; and
    4. identify the state employees or representatives to whom the documentary material is to be made available for inspection and copying.
  3. A demand may not
    1. require the production of documentary material that would be privileged from disclosure if demanded by a subpoena duces tecum issued by a court of the state; or
    2. contain a requirement that would be unreasonable or improper if contained in a subpoena duces tecum issued by a court of the state; however, this does not limit the power of the attorney general to require production of documents located outside the state that pertain to matters affecting the state.
  4. The demand may be served by the attorney general or the designee of the attorney general by
    1. delivering a copy of it to the person to be served or, if the person is not a natural person, to an officer of the person to be served;
    2. delivering a copy of it to a place of business in the state of the person to be served; or
    3. mailing by registered or certified mail a copy of it addressed to the person to be served at a place of business in the state or, if the person has no place of business in the state, to the principal office or place of business of the person.
  5. Documentary material produced pursuant to a demand, or copies of it, unless otherwise ordered by a superior court for good cause shown, may not be produced for inspection or copying by, nor may its contents be disclosed to, anyone other than an authorized employee of the state without the consent of the person who produced the material. However, under those reasonable terms and conditions the attorney general prescribes, copies of the documentary material shall be available for inspection and copying by the person who produced the material or an authorized representative of that person. The attorney general, or a designee, may use copies of the documentary material as the attorney general or designee considers necessary in the enforcement of AS 45.50.562 45.50.598 , including presentation before a court; however, material that contains trade secrets may not be presented except with the approval of the court in which the action is pending after adequate notice to the person furnishing the material.
  6. At any time before the return date specified in the demand, or within 20 days after the demand has been served, whichever period is shorter, a petition to extend the return date for, or to modify or set aside a demand issued under (a) of this section, stating good cause, may be filed in the superior court for the judicial district where the parties reside.  A petition by a person on whom a demand is served, stating good cause, to require the attorney general or another person to act in accordance with the requirements of (e) of this section, and all other petitions in connection with a demand, may be filed in the superior court for the judicial district in which the person on whom the demand is served resides.
  7. A person on whom a demand is served under this section shall comply with the terms of the demand unless otherwise provided by an order of court issued in response to a petition filed under (f) of this section. A person who, with intent to avoid, prevent, or obstruct compliance, in whole or in part, with an investigative demand under this section, removes from any place, conceals, withholds, or destroys, mutilates, alters, or by any other means falsifies, documentary material in the possession, custody, or control of a person that is the subject of a demand duly served on any person, or who otherwise wilfully disobeys any such demand, is guilty of a misdemeanor, and is punishable upon conviction by a fine of not more than $5,000, or by imprisonment for a term of not more than one year, or by both. Failure of the state to serve the demand properly under (d) of this section is a defense to prosecution under this subsection, but invalidity of the demand under (b) or (c) of this section is not a defense, and that invalidity may be tested only in an action under (f) of this section to modify or set aside the demand.
  8. Nothing in this section impairs the authority of the attorney general or a designee to lay before a grand jury of this state evidence concerning a violation of AS 45.50.562 45.50.596 , to invoke the power of a court to compel the production of evidence before a grand jury, or to file a civil complaint or criminal information alleging a violation of AS 45.50.562 45.50.596 .

History. (§ 1 ch 53 SLA 1975; am §§ 48 — 50 ch 22 SLA 2015)

Revisor’s notes. —

Formerly AS 45.52.210. Renumbered in 1980. In 2006, in subsection (e), “AS 45.50.562 45.50.598 ” was substituted for “this chapter” to reflect the 1980 renumbering of AS 45.50.562 45.50.598 .

Effect of amendments. —

The 2015 amendment, effective July 1, 2015, in (a), deleted “a” preceding “documentary evidence” and substituted “on” for “upon” preceding “that person an investigative demand”; in (d), in (d)(1), deleted the comma following “person to be served”, in (d)(3), deleted the comma following “place of business in the state” and added “the” preceding “principal office”; in (g), twice substituted “on” for “upon”, and made other stylistic changes.

Notes to Decisions

Due process in exercising right of judicial review. —

Since a petition to modify or set aside the investigative demand automatically tolls the penalty provisions of subsection (g) of this section, it cannot be said that appellants exercise the right of judicial review only at the risk of incurring severe penalties. Appellants were accorded a statutory right to challenge the validity of the state’s investigative demand and this is all that due process requires. That appellants must initiate such proceedings does not indicate otherwise. Matanuska Maid v. State, 620 P.2d 182 (Alaska 1980), overruled in part, Rosen v. State Bd. of Pub. Accountancy, 689 P.2d 478 (Alaska 1984).

Inadequate notice. —

An investigative demand issued to appellants failed to adequately apprise them of their right to challenge the demand or to inform them of a procedure for affecting such a challenge when the only notice of such rights contained in the demand was an excerpt from subsection (g) of this section. Matanuska Maid v. State, 620 P.2d 182 (Alaska 1980), overruled in part, Rosen v. State Bd. of Pub. Accountancy, 689 P.2d 478 (Alaska 1984).

Fourth amendment requirements for issuance of subpoena. —

A demand for documents may be issued without prior judicial review, and it is sufficient for 4th amendment purposes that the subpoena is issued pursuant to lawful authority, relevant to the inquiry for which it is issued, and contains adequate specification of the documents to be produced. Matanuska Maid v. State, 620 P.2d 182 (Alaska 1980), overruled in part, Rosen v. State Bd. of Pub. Accountancy, 689 P.2d 478 (Alaska 1984).

Retrospective application. —

A party may not be prosecuted for acts committed prior to this act’s effective date August 5, 1975. Such acts, however, may be relevant to possible antitrust violations committed after the effective date of the act. Matanuska Maid v. State, 620 P.2d 182 (Alaska 1980), overruled in part, Rosen v. State Bd. of Pub. Accountancy, 689 P.2d 478 (Alaska 1984).

The statutory changes in the power to investigate brought about by AS 45.50.590 et seq. affect only procedure, and mere procedural changes that do not affect substantive rights are not immune from retrospective application. Matanuska Maid v. State, 620 P.2d 182 (Alaska 1980), overruled in part, Rosen v. State Bd. of Pub. Accountancy, 689 P.2d 478 (Alaska 1984).

The attorney general did not retrospectively apply the Restraint of Trade Act, AS 45.50.562 45.50.596 , by requesting documents executed prior to the effective date of the statute (August 5, 1975). A party suffers no increased liability as a result of the state’s investigatory procedure nor does the procedure otherwise affect a party’s substantive rights. Matanuska Maid v. State, 620 P.2d 182 (Alaska 1980), overruled in part, Rosen v. State Bd. of Pub. Accountancy, 689 P.2d 478 (Alaska 1984).

No conflict between subsection (f) and Civ. R. 91(c). —

There is no conflict between subsection (f) of this section and Civ. R. 91(c), which merely states that if a proceeding to compel production to enforce an administrative subpoena is brought the civil rules shall apply, because the hearing in the present case was not a proceeding in court to compel production but was rather a hearing to modify or set aside the investigative demand. Matanuska Maid v. State, 620 P.2d 182 (Alaska 1980), overruled in part, Rosen v. State Bd. of Pub. Accountancy, 689 P.2d 478 (Alaska 1984).

The state is not required to initiate a proceeding to compel production unless the recipient of a valid investigative demand ignores the demand. In that event, the civil rules would apply to a proceeding brought by the state in the superior court to compel production. Matanuska Maid v. State, 620 P.2d 182 (Alaska 1980), overruled in part, Rosen v. State Bd. of Pub. Accountancy, 689 P.2d 478 (Alaska 1984).

Thus, investigative demand procedure does not conflict with Alaska Const., art. IV, § 15. —

The investigative demand procedure set forth in AS 45.50.590 and this section does not conflict with the rulemaking power vested in the Supreme Court by Alaska Const., art. IV, § 15, insofar as it involves hearings to modify or set aside investigative demands and not proceedings to compel production of document. Matanuska Maid v. State, 620 P.2d 182 (Alaska 1980), overruled in part, Rosen v. State Bd. of Pub. Accountancy, 689 P.2d 478 (Alaska 1984).

Investigation of acts violating both this article and article 3 of chapter. —

Although it does not necessarily follow that an act that violates the Unfair Trade Practices and Consumer Protection Act, AS 45.50.471 45.50.561 , would also violate the Restraint of Trade Act, AS 45.50.562 45.50.596 , if an act does violate both statutes, an investigation pursuant to AS 45.50.495 would be appropriate. Matanuska Maid v. State, 620 P.2d 182 (Alaska 1980), overruled in part, Rosen v. State Bd. of Pub. Accountancy, 689 P.2d 478 (Alaska 1984).

Since the bidding and pricing activities under investigation could have conceivably lacked some essential element of an AS 45.50.562 violation, which is Alaska’s equivalent of the Sherman Act, 15 U.S.C. § 1 et seq., it was appropriate for the state to investigate as well the possible violation of AS 45.50.471 which is Alaska’s equivalent of the Federal Trade Commission Act, 15 U.S.C. § 41 et seq. Matanuska Maid v. State, 620 P.2d 182 (Alaska 1980), overruled in part, Rosen v. State Bd. of Pub. Accountancy, 689 P.2d 478 (Alaska 1984).

The state cannot be expected to know with certainty the exact nature of a suspected violation. This uncertainty is the very reason for conferring precomplaint investigatory authority on the attorney general. Matanuska Maid v. State, 620 P.2d 182 (Alaska 1980), overruled in part, Rosen v. State Bd. of Pub. Accountancy, 689 P.2d 478 (Alaska 1984).

The exemption contained in AS 45.50.481(a)(1) was not intended to apply to acts proscribed by the Alaska Restraint of Trade Act, AS 45.50.562 45.50.596 . Matanuska Maid v. State, 620 P.2d 182 (Alaska 1980), overruled in part, Rosen v. State Bd. of Pub. Accountancy, 689 P.2d 478 (Alaska 1984).

“Authorized employee.” —

Outside law firm was part of the team that the attorney general had assembled to conduct investigations into the oil company’s pricing of gasoline and fell within the circle of those having direct authority to inspect the documents, constituting an “authorized employee” for purposes of subsection (e); the state was not required to show good cause each time it needed to hire outside legal counsel. Tesoro Petroleum Corp. v. State, 42 P.3d 531 (Alaska 2002).

Tolling penalty provision of subsection (g). —

Assessment of penalties for failure to comply with the investigative demand are dependent upon the absence of a court order issued in response to a petition to modify or set aside the demand under subsection (f) of this section. Accordingly, such a petition, if timely filed would, in effect, toll the penalty provision in subsection (g) of this section during the pendency of the proceeding. Matanuska Maid v. State, 620 P.2d 182 (Alaska 1980), overruled in part, Rosen v. State Bd. of Pub. Accountancy, 689 P.2d 478 (Alaska 1984).

Since the court is specifically empowered by subsection (f) of this section to extend the return date of the demand, there is no obstacle to extending that date until all issues presented in the petition are resolved by the court. Matanuska Maid v. State, 620 P.2d 182 (Alaska 1980), overruled in part, Rosen v. State Bd. of Pub. Accountancy, 689 P.2d 478 (Alaska 1984).

A person served with an investigative demand suffers no penalty for noncompliance as long as a petition, timely filed under subsection (f), is pending. Matanuska Maid v. State, 620 P.2d 182 (Alaska 1980), overruled in part, Rosen v. State Bd. of Pub. Accountancy, 689 P.2d 478 (Alaska 1984).

Willful disobedience. —

Subsection (g) of this section punishes only “wilful” disobedience. A sensible construction of this language is that one who files a petition to modify or set aside an investigative demand does not act in willful disobedience of the demand and is therefore not subject to the penalty provisions of subsection (g). Matanuska Maid v. State, 620 P.2d 182 (Alaska 1980), overruled in part, Rosen v. State Bd. of Pub. Accountancy, 689 P.2d 478 (Alaska 1984).

Good cause for disclosure under subsection (a). —

Disclosure under subsection (a) is permitted when a requesting party shows that the information to be disclosed would likely be fair game for discovery in pending civil litigation and is sought for purposes compatible with the underlying purposes of the state’s investigation. Novak v. Orca Oil Co., 875 P.2d 756 (Alaska 1994).

Where a private party seeks information under subsection (e) in aid of civil litigation against the party from whom the information was obtained, an appropriate starting point for determining good cause is the general discovery standard set forth in Alaska Civil Rule 26(b)(1). Novak v. Orca Oil Co., 875 P.2d 756 (Alaska 1994).

Good cause for disclosure shown. —

The trial court did not abuse its discretion in finding good cause to allow appellant access to attorney general’s investigatory files where there was a close similarity between the attorney general’s investigation and appellant’s counterclaim; the state joined in appellant’s request for disclosure, and the court’s order was expressly tailored to allow appellee to claim privilege as to any of the documents it had provided to the state in response to the civil investigative demand. Novak v. Orca Oil Co., 875 P.2d 756 (Alaska 1994).

Sec. 45.50.594. Investigatory demand for attendance of witness.

  1. In connection with an investigation authorized by AS 45.50.590 , the attorney general may issue an investigative demand compelling the attendance of a person for examination under oath before the attorney general or before a court of record.
  2. Each demand shall
    1. state the specific statute the alleged violation of which is under investigation, and the general subject matter of the investigation;
    2. state the date, time, and place at which the examination is to take place.
  3. A demand may be served by the attorney general, or a designee, in accordance with the procedures prescribed in AS 45.50.592(d) .
  4. If a person ordered to attend the inquiry fails to attend without good cause, the person is guilty of a misdemeanor and upon conviction is punishable by a fine of not more than $5,000, or by imprisonment for not more than one year, or by both.  If a person in attendance at the inquiry refuses to answer a question on the ground that the person may be incriminated by the answer, and if the attorney general, or a designee, in a writing directed to the person being questioned orders the person to answer the question, the person shall comply with the order.  After complying, and if but for this section the person would have been privileged to withhold the answer given, the person may not be prosecuted for an offense or subjected to a penalty or forfeiture for or on account of a transaction, matter, or thing concerning which the person gave evidence. However, the person may nevertheless be prosecuted or subjected to penalty or forfeiture for a perjury, false swearing, or contempt committed in answering or failing to answer.  If a person refuses to testify after being granted immunity from prosecution and after being ordered to testify, the person may be adjudged in contempt and committed to jail until the time the person purges the contempt by testifying. A grant of immunity does not prevent the attorney general from instituting civil contempt proceedings against a person who violates any of the above provisions.

History. (§ 1 ch 53 SLA 1975)

Revisor’s notes. —

Formerly AS 45.52.220. Renumbered in 1980.

Sec. 45.50.596. Definitions.

In AS 45.50.562 45.50.596 ,

  1. “asset” includes any property, tangible or intangible, real, personal, or mixed and wherever located, and any other thing of value;
  2. “documentary evidence” includes an original or copy of a book, record, report, memorandum, paper, communication, tabulation, map, chart, photograph, mechanical tabulation, magnetic tape, or other computer data storage system, or other tangible document or recording;
  3. “trade” and “commerce” include trade in goods, merchandise, natural resources, whether or not severed, extracted, harvested, or produced, agricultural products, produce, choses in action, commodities, and any other article of commerce; “trade” and “commerce” include trade or business in service trades, transportation, banking, lending, advertising, bonding, and any other business whether or not that business furnishes a personal service.

History. (§ 1 ch 53 SLA 1975; am § 42 ch 3 SLA 2017)

Revisor’s notes. —

Formerly AS 45.52.300. Renumbered in 1980.

Effect of amendments. —

The 2017 amendment, effective July 1, 2017, in (3), deleted “but are not limited to,” following “‘trade’ and ‘commerce’ include”, and substituted “‘trade’ and ‘commerce’ include” for “they” preceding “trade or business in service trades”.

Sec. 45.50.598. Short title.

AS 45.50.562 45.50.598 may be cited as the Alaska Restraint of Trade Act.

History. (§ 67 ch 35 SLA 2003)

Article 5. Deceptive Advertising of Civil Defense Aids.

Sec. 45.50.600. Power and duty of director of civil defense.

The state director of civil defense

  1. may adopt regulations under AS 44.62 (Administrative Procedure Act) defining fair standards in the advertising and sale of civil defense aids; and
  2. shall prohibit unfair or deceptive practices.

History. (§ 2 ch 144 SLA 1962)

Revisor’s notes. —

Formerly AS 45.80.010 . Renumbered in 1980.

Sec. 45.50.601. Content of regulations.

Regulations adopted by the state director of civil defense must prohibit the following practices:

  1. exaggerated or misleading claims of protection afforded by shelters;
  2. the use of misleading pictures;
  3. the use of deceptive pricing practices;
  4. the use of guarantees in such a manner as to constitute a misrepresentation;
  5. representations of endorsement by a governmental agency; and
  6. any unfair or deceptive practice.

History. (§ 3 ch 144 SLA 1962)

Revisor’s notes. —

Formerly AS 45.80.020. Renumbered in 1980.

Sec. 45.50.602. Content of installment or credit purchase plans.

Installment or credit purchase plans for civil defense aids must include a clear statement of financial terms, including a statement of annual simple interest.

History. (§ 4 ch 144 SLA 1962)

Revisor’s notes. —

Formerly AS 45.80.030. Renumbered in 1980.

Sec. 45.50.603. Prosecution by attorney general.

The attorney general shall prosecute any legal action on behalf of the state director of civil defense.

History. (§ 6 ch 144 SLA 1962)

Revisor’s notes. —

Formerly AS 45.80.040. Renumbered in 1980.

Sec. 45.50.604. Criminal and civil penalties.

A person who violates a provision of AS 45.50.600 45.50.606 or a regulation adopted by the state director of civil defense under AS 45.50.600 45.50.606 is punishable by a fine of not more than $500, or by imprisonment for not more than six months, or, in the alternative, is subject to a civil penalty not more than $5,000.

History. (§ 5 ch 144 SLA 1962)

Revisor’s notes. —

Formerly AS 45.80.050. Renumbered in 1980.

Sec. 45.50.606. Definition of “civil defense aid”.

In AS 45.50.600 45.50.606 “civil defense aid” means a product, service, structure, or improvement intended for use by civilians as a protection against a result of an attack by a foreign power on the United States and includes but is not limited to a protective shelter or improvement.

History. (§ 1 ch 144 SLA 1962)

Revisor’s notes. —

Formerly AS 45.80.060. Renumbered in 1980.

Article 6. Alaska Gasoline Products Leasing Act.

Cross references. —

For failure to comply with AS 45.50.800 45.50.850 as an unlawful trade practice, see AS 45.50.471(b) ; for legislative findings in connection with the enactment of this article, see § 1, ch. 234, SLA 1976 in the Temporary and Special Acts.

Sec. 45.50.800. Disclosures to be made by distributors and refiners before conclusion of agreement.

Before entry into a lease agreement, a refiner or distributor shall disclose to the dealer facts that would reasonably be considered material to the dealer’s decision to enter into the lease. These facts must include, but not be limited to,

  1. ownership of property of the retail outlet;
  2. if the real property is not owned by a refiner or distributor, then the nature of the relationship between the real property owner and the refiner or distributor and the length of the underlying lease, if applicable;
  3. the last known addresses of dealers operating the retail outlet for the last five years;
  4. the gasoline gallonage history, if any, of the station for the last five years;
  5. any sales goals or quotas the refiners or distributors intend to apply to the station;
  6. the nearest gasoline outlet owned, controlled, or operated by the refiner or distributor and any plans the distributor or refiner has to open new retail outlets within the trade area of the retail outlet; and
  7. any plans the refiner or distributor has for the future of the subject retail outlet.

History. (§ 2 ch 234 SLA 1976)

Sec. 45.50.810. Violations.

  1. A person may not, directly or indirectly, through officers, employees, or agents,
    1. require the dealer at the time of entering into the lease agreement to relieve any person from liability imposed by  AS 45.50.800 45.50.850 ;
    2. require the dealer to agree to waive the right to a jury trial or any right of counterclaim the dealer may have;
    3. restrict or inhibit directly or indirectly the right of free association for any lawful purpose of the dealer;
    4. except as to the initial inventory, require a dealer to purchase or otherwise lease goods or services of a refiner or distributor or from an approved source of supply unless and to the extent that the refiner or distributor satisfies the burden of proving that such restricted purchasing agreements are reasonably necessary for lawful purposes justified on business grounds and do not substantially affect competition; in determining whether a requirement to purchase is lawful, the court shall be guided by the decisions of the courts of the United States in interpreting and applying the antitrust laws and the Federal Trade Commission Act of the United States;
    5. impose unreasonable standards of performance on the dealer;
    6. require a dealer to participate financially in the use of any premium coupon or giveaway or rebate in the operation of the business; however, a distributor may require the dealer to distribute premiums, coupons, or giveaways to customers that are provided to the dealer at the expense of the refiner or distributor or when the promotion is self-liquidating;
    7. fail to deal with the dealer in good faith;
    8. require the dealer to keep the retail outlet open for business more than 12 consecutive hours a day or more than six days a week; however, this paragraph may not be construed to prevent a retail outlet from being open when required to be open to conform to a state or federal law or regulation; or
    9. require a dealer to purchase or rent a product or service for more than a fair and reasonable price.
  2. A refiner or distributor may not, directly or indirectly, through any officer, agent, or employee, terminate, cancel, or fail to renew a dealer lease without first giving written notice setting out all of the reasons for the termination or cancellation, or intent not to renew to the dealer at least 45 days in advance of the termination, cancellation, or failure to renew except when
    1. the alleged grounds are voluntary abandonment by the dealer of the lessee relationship, the above notice may be given five days in advance of the termination, cancellation, or failure to renew;
    2. the alleged grounds are the conviction of the dealer in a court of competent jurisdiction of a felony;
    3. the lease specifically establishes a period of notice of less than 45 days in which either party may terminate the lease.
  3. Except as provided in (d) of this section, a refiner or distributor may not terminate, cancel, or fail to renew a dealer lease without good cause. Good cause  includes
    1. the failure of a dealer to comply with the lawful material provisions of a lease between the distributor or refiner and the dealer and to cure each default after being given written notice and a reasonable opportunity to cure the default;
    2. an adjudication that the dealer is a bankrupt or insolvent or if the dealer makes an assignment for the benefit of creditors or a similar disposition of assets of franchise business or voluntarily abandons the business or is convicted of or pleads guilty or no contest to a charge of violating any law relating to any business;
    3. the good faith business decision of the lessor that the lessor no longer requires a retail outlet at that location for the marketing of gasoline; and
    4. the dealer’s failure to sign the new agreement if at the time of renewal of the lease the distributor or refiner and the dealer cannot agree upon new terms and the terms offered by the refiner or distributor do not violate any other laws of the state or of the United States and the terms are essentially the same as those offered to other dealers in similar retail outlets and do not discriminate against the subject dealer.
  4. A refiner or distributor  may provide in the lease for its termination without cause during a reasonable trial period, not to exceed one year, if the dealer involved has not already been a dealer of a refiner or distributor for that period of time.
  5. A refiner or distributor may not engage in price discrimination between dealers if the effect of the discrimination may be substantially to lessen competition unless that discrimination is based upon quantity purchased or transportation costs or capital investment of the dealer. Nothing in this section prevents a refiner or distributor from offering a lower price or furnishing a service or facility to a dealer when the offer is made in good faith to meet an equally low price of a competitor, or the services or facilities furnished by that competitor.

History. (§ 2 ch 234 SLA 1976; am §§ 43, 44 ch 3 SLA 2017)

Cross references. —

For the Federal Trade Commission Act, see 15 U.S.C. 41 et seq.

Effect of amendments. —

The 2017 amendment, effective July 1, 2017, at the end of the introductory language in (c), substituted “Good cause includes” for “Good cause shall include without limitation:”; in (d), substituted “A refiner or distributor may” for “a refiner or distributor shall be permitted to” at the beginning.

Sec. 45.50.820. Obligation of distributor to repurchase upon termination, etc., of agreement.

If the refiner or distributor terminates, cancels, or fails to renew under AS 45.50.810(c)(1) , (2), or (3) or for any good cause other than under AS 45.50.810(c)(4) , the refiner or distributor shall compensate the dealer for the fair market value of the business, excluding goodwill. Refiners or distributors terminating, canceling, or failing to renew under AS 45.50.810(c)(4) shall compensate the dealer for the fair market value of the business, including good will. Valuation other than good will shall include the fair market value of the dealer’s inventory supplies, equipment, and furnishings purchased from the refiner or distributor exclusive of personalized materials that do not have a value to the refiner or distributor and inventory supplies, equipment, and furnishings not reasonably required in the conduct of the business. Compensation shall be made within 60 days from the date of termination unless it is necessary that a lawsuit be filed under AS 45.50.830 . The refiner or distributor may offset against accounts owed by the dealer under this section any amount owed by the dealer to the refiner or distributor.

History. (§ 2 ch 234 SLA 1976; am § 126 ch 35 SLA 1993)

Sec. 45.50.825. Right of first refusal of surviving spouse.

Unless provided otherwise by the lease, upon the death of the lessee the lease shall terminate and the surviving spouse shall have the right of first refusal of the new lease if the surviving spouse has been an active participant in the business and is qualified.

History. (§ 2 ch 234 SLA 1976)

Sec. 45.50.830. Court to determine fair market value when parties cannot agree.

If under AS 45.50.820 the distributor or refiner has good cause and the distributor or refiner and the dealer cannot agree on the fair market value of the business, then either party may initiate an action in the superior court where the retail outlet exists. Reasonable attorney fees and the appraiser fees shall be awarded to the dealer if the amount awarded to the dealer by the jury or the court is 10 percent higher than the final offer, if any, made by the refiner or distributor before the filing of the lawsuit. If the amount awarded to the dealer by the jury or the court is 10 percent lower than the final offer, if any, made by the refiner or distributor before the filing of the lawsuit, reasonable attorney fees and the appraiser fees shall be awarded to the refiner or distributor.

History. (§ 2 ch 234 SLA 1976)

Sec. 45.50.840. Definitions.

In AS 45.50.800 45.50.830 , unless the context otherwise requires,

  1. “dealer” means a person primarily engaged in the sale of gasoline to the motoring public through a retail outlet leased from the refiner or distributor or its agent by the person and operated by the person;
  2. “distributor” means any person or corporation other than a refiner engaged in the sale, assignment, or distribution of gasoline to four or more dealer-operated retail outlets;
  3. “gasoline” means all products commonly or commercially known or sold as gasoline;
  4. “lease” means an oral or written contract or agreement or series of agreements, either express or implied, in which the dealer is required directly or indirectly to purchase 50 percent or more of the dealer’s supply of gasoline from a distributor or refiner and in which the dealer is granted authority to occupy premises owned, leased, or in any way controlled, directly or indirectly, by the refiner or distributor;
  5. “refiner” means a company, corporation, or individual who owns or controls, or controls through a substantially owned subsidiary, partnership, or joint venture, a refinery used for the production of gasoline, diesel, or other motor vehicle fuels.

History. (§ 2 ch 234 SLA 1976; am § 45 ch 3 SLA 2017)

Revisor’s notes. —

Reorganized in 1986 to alphabetize the defined terms.

Effect of amendments. —

The 2017 amendment, effective July 1, 2017, in (5), substituted “‘refiner’ means” for “‘refiner’ is” at the beginning.

Sec. 45.50.850. Short title.

AS 45.50.800 45.50.850 may be cited as the Alaska Gasoline Products Leasing Act.

History. (§ 2 ch 234 SLA 1976)

Article 7. Sound Recordings.

Sec. 45.50.900. Reproduction and sale of sound recordings without consent.

  1. A person who (1) reproduces for sale, sells, offers for sale, or knowingly advertises for sale any sound recording that has been reproduced without the written consent of the owner or (2) advertises, offers for sale or resale, or sells or resells a phonograph record, disc, wire, tape, film, or other article on which sounds are recorded, without clearly and conspicuously disclosing on the outside cover, box, or jacket the actual name and full address of the manufacturer and the name of the actual performer or group, is guilty of a misdemeanor and, upon conviction, is punishable by confiscation of the unlawful stock of the reproduced recording and by imprisonment for a period of not more than one year, or by a fine of not more than $1,000, or by both.  In this subsection “owner” means the person who owns the original fixation of sounds embodied in the master phonograph record, master disc, master tape, master film, or other device used for reproducing sounds on phonograph records, discs, tapes, films, or other articles upon which sound is recorded, and from which the transferred recorded sounds are directly derived.
  2. The prohibition contained in (a) of this section is not applicable to the reproduction of a sound recording that
    1. is used, or intended to be used, solely for broadcast by commercial or educational radio or television stations; or
    2. constitutes the verbatim transcript, or other public record, of the proceedings of a judicial, legislative, or administrative agency, department, or other public body for which a charge or fee may or may not be made or collected for the reproduced recording.

History. (§ 1 ch 134 SLA 1974; am § 1 ch 193 SLA 1975)

Revisor’s notes. —

Formerly AS 45.51.010 and 45.51.020. Renumbered in 1980.

Article 8. Alaska Uniform Trade Secrets Act.

Sec. 45.50.910. Injunctive relief for misappropriation of trade secrets.

  1. A court may enjoin actual or threatened misappropriation of trade secrets. Upon application to the court, an injunction shall be terminated when the trade secret has ceased to exist, but the injunction may be continued for an additional reasonable period of time in order to eliminate commercial advantage that otherwise would be derived from the misappropriation.
  2. If the court determines that it would be unreasonable to prohibit future use of a trade secret, an injunction may condition future use upon payment of a reasonable royalty for no longer than the period of time the use could have been prohibited.
  3. In appropriate circumstances, affirmative acts to protect a trade secret may be compelled by court order.

History. (§ 1 ch 103 SLA 1988)

Sec. 45.50.915. Damages.

  1. In addition to or in lieu of injunctive relief, a complainant may recover damages for the actual loss caused by misappropriation. A complainant also may recover for the unjust enrichment caused by misappropriation that is not taken into account in computing damages for actual loss.
  2. If wilful and malicious misappropriation exists, the court may award exemplary damages in an amount not exceeding twice the damages awarded under (a) of this section.

History. (§ 1 ch 103 SLA 1988)

Sec. 45.50.920. Preservation of secrecy.

In an action under AS 45.50.910 45.50.945 , a court shall preserve the secrecy of an alleged trade secret by reasonable means, which may include granting protective orders in connection with discovery proceedings, holding in-camera hearings, sealing the records of the action, and ordering any person involved in the litigation not to disclose an alleged trade secret without prior court approval.

History. (§ 1 ch 103 SLA 1988)

Sec. 45.50.925. Limitation of actions.

An action for misappropriation must be brought within three years after the misappropriation is discovered or by the exercise of reasonable diligence should have been discovered. For the purposes of this section, a continuing misappropriation constitutes a single claim.

History. (§ 1 ch 103 SLA 1988)

Sec. 45.50.930. Effect on other laws.

  1. AS 45.50.910 45.50.945 displace conflicting tort, restitutionary, and other state laws pertaining to civil liability for misappropriation of a trade secret.
  2. AS 45.50.910 45.50.945 do not affect
    1. contractual or other civil liability or relief that is not based upon misappropriation of a trade secret; or
    2. criminal liability for misappropriation of a trade secret.
  3. AS 45.50.910 45.50.945 do not apply to investigations or actions by the attorney general under AS 45.50.471 45.50.561 (Alaska Unfair Trade Practices and Consumer Protection Act) or under AS 45.50.562 45.50.596 (Alaska Restraint of Trade Act).

History. (§ 1 ch 103 SLA 1988; am § 46 ch 3 SLA 2017)

Effect of amendments. —

The 2017 amendment, effective July 1, 2017, in (c), substituted “(Alaska Unfair Trade Practices and Consumer Protection Act)” for “unfair trade practices and consumer protection” following “AS 45.50.471 45.50.561 ” and “(Alaska Restraint of Trade Act)” for “(restraint of trade)” following “AS 45.50.562 45.50.596 ”.

Notes to Decisions

Cited in

Powercorp Alaska, LLC v. Alaska Energy Auth., 290 P.3d 1173 (Alaska 2012).

Sec. 45.50.935. Uniformity of application and construction.

AS 45.50.910 45.50.945 shall be applied and construed to make the law uniform with respect to trade secrets among states enacting similar provisions.

History. (§ 1 ch 103 SLA 1988)

Sec. 45.50.940. Definitions.

In AS 45.50.910 45.50.945 , unless the context otherwise requires,

  1. “improper means” includes theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means;
  2. “misappropriation” means
    1. acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or
    2. disclosure or use of a trade secret of another without express or implied consent by a person who
      1. used improper means to acquire knowledge of the trade secret; or
      2. at the time of disclosure or use, knew or had reason to know that knowledge of the trade secret was derived from or through a person who had utilized improper means to acquire it or who owed a duty to the person seeking relief to maintain its secrecy or limit its use, or was acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or
      3. before a material change of the person’s position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake;
  3. “trade secret” means information that
    1. derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and
    2. is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

History. (§ 1 ch 103 SLA 1988)

Notes to Decisions

Misappropriation not shown. —

Claim for misappropriation of a trade secret in a dispute involving bids to upgrade remote village power services failed. There was no evidence that an agency employee acquired proprietary information by improper means when it was freely given to him, and it was not shown that the employee disclosed specific proprietary information to another bidder or any other party. Although a confidentiality agreement was sent to the agency, it was not clear whether the employee actually saw the agreement. Powercorp Alaska, LLC v. Alaska Energy Auth., 290 P.3d 1173 (Alaska 2012), amended, — P.3d — (Alaska 2013).

Determination of existence of a trade secret. —

There was a genuine issue of material fact relating to whether wiring and programming information related to systems for providing off-grid power to remote villages constituted a trade secret and, if so, the scope of information falling under the definition of trade secret. There was evidence concerning the value of the information, and how difficult it would have been for others to properly acquire or duplicate it; moreover, there was an effort to keep the information secret due to the submission of a confidentiality agreement. Powercorp Alaska, LLC v. Alaska Energy Auth., 290 P.3d 1173 (Alaska 2012), amended, — P.3d — (Alaska 2013).

Sec. 45.50.945. Short title.

AS 45.50.910 45.50.945 may be cited as the Alaska Uniform Trade Secrets Act.

History. (§ 1 ch 103 SLA 1988)

Chapter 51. Sound Recordings.

[Renumbered as AS 45.50.900 .]

Chapter 52. Monopolies; Restraint of Trade.

[Renumbered as AS 45.50.562 45.50.596 .]

Chapter 53. Cigarette Sales.

Cross references. —

For legislative findings and purpose in enacting this chapter, see § 1, ch. 46, SLA 1999 in the 1999 Temporary and Special Acts.

Legislative history reports. —

For governor’s transmittal letter concerning the enactment of this chapter by § 2, ch. 46, SLA 1999 (HB 102), see 1999 House Journal 259.

Sec. 45.53.010. Tobacco product Master Settlement Agreement recognized.

The Master Settlement Agreement entered into by certain United States tobacco product manufacturers and the state, and related documents, for settlement of claims raised in State of Alaska v. Philip Morris, Incorporated, and approved by the Alaska Superior Court on February 9, 1999, are recognized.

History. (§ 2 ch 46 SLA 1999)

Sec. 45.53.020. Requirements.

  1. Any tobacco product manufacturer selling cigarettes to consumers within the state, whether directly or through a distributor, retailer, or similar intermediary or intermediaries, after June 4, 1999, shall do one of the following:
    1. become a participating manufacturer, as that term is defined in sec. II(jj) of the Master Settlement Agreement, and generally perform its financial obligations under the Master Settlement Agreement; or
    2. place into a qualified escrow fund by April 15 of the year following each listed calendar year the following amounts, as such amounts are adjusted for inflation:
      1. for 1999, $.0094241 per unit sold on or after June 4, 1999, but before January 1, 2000;
      2. for 2000, $.0104712 per unit sold during that year;
      3. for each of 2001 and 2002, $.0136125 per unit sold during the year in question;
      4. for each of 2003 through 2006, $.0167539 per unit sold during the year in question;
      5. for each of 2007 and each year thereafter, $.0188482 per unit sold during the year in question.
  2. A tobacco product manufacturer that places money into escrow under (a)(2) of this section is entitled to receive the interest or other appreciation on such money as earned. Such money itself shall be released from escrow only under the following circumstances:
    1. to pay a judgment or settlement on a released claim brought against such tobacco product manufacturer by this state or a releasing party located or residing in this state; the funds shall be released from escrow under this paragraph in the order in which they were placed into escrow and only to the extent and at the time necessary to make payments required under the judgment or settlement;
    2. to the extent that the tobacco product manufacturer establishes that the amount that it was required to place into escrow on account of units sold in the state in a particular year was greater than the Master Settlement Agreement payments, as determined under sec. IX(i) of the Master Settlement Agreement, including, after final determination of all adjustments, payments that the manufacturer would have been required to make on account of those units had it been a participating manufacturer, the excess shall be released from escrow and revert back to that tobacco product manufacturer; or
    3. to the extent not released from escrow under (1) or (2) of this subsection, funds placed into escrow shall be released from escrow and revert back to the tobacco product manufacturer 25 years after the date on which they were placed into escrow.
  3. To be a qualified escrow fund under this section, the
    1. fund must be an escrow fund governed by an escrow arrangement with a federally or state chartered financial institution having no affiliation with a tobacco product manufacturer and having assets of at least $1,000,000,000; and
    2. escrow arrangements described in (1) of this subsection must
      1. require that the financial institution hold the principal of the escrow fund for the benefit of releasing parties; and
      2. prohibit the tobacco product manufacturer that places money into the escrow fund from using, accessing, or directing the use of the principal of the fund except as consistent with this section.

History. (§ 2 ch 46 SLA 1999; am § 38 ch 1 FSSLA 2004)

Delayed contingent amendment of subsection (b). —

Under § 39, ch. 1, FSSLA 2004, subsection (b) is amended to read as follows: “(b) A tobacco product manufacturer that places money into escrow under (a)(2) of this section is entitled to receive the interest or other appreciation on such money as earned. Such money itself shall be released from escrow only under the following circumstances:

“(1) to pay a judgment or settlement on a released claim brought against such tobacco product manufacturer by this state or a releasing party located or residing in this state; the funds shall be released from escrow under this paragraph in the order in which they were placed into escrow and only to the extent and at the time necessary to make payments required under the judgment or settlement;

“(2) to the extent not released from escrow under (1) of this subsection, funds placed into escrow shall be released from escrow and revert back to the tobacco product manufacturer 25 years after the date on which they were placed into escrow.”

Under sec. 48(a), ch. 1, FSSLA 2004, this amendment of subsection (b) takes effect “only if AS 45.53.020(b)(2) , as amended in sec. 38 of this Act, is held by a court of competent jurisdiction to be unconstitutional,” while under sec. 52, ch. 1, FSSLA 2004 “if [the amendment of subsection (b) by] sec. 39 of this Act takes effect under sec. 48(a) of this Act, it takes effect on the day after the date of a final order or decision by a court of competent jurisdiction holding AS 45.53.020(b) , as amended in sec. 38 of this Act, to be unconstitutional.” As of January 2022, the contingencies had not occurred.

Delayed contingent amendment of subsection (b). —

Under sec. 40, ch. 1, FSSLA 2004, subsection (b) is amended to read as follows: “A tobacco product manufacturer that places money into escrow under (a)(2) of this section is entitled to receive the interest or other appreciation on such money as earned. Such money itself shall be released from escrow only under the following circumstances:

“(1) to pay a judgment or settlement on a released claim brought against such tobacco product manufacturer by this state or a releasing party located or residing in this state; the funds shall be released from escrow under this paragraph in the order in which they were placed into escrow and only to the extent and at the time necessary to make payments required under the judgment or settlement;

“(2) to the extent that the tobacco product manufacturer establishes that the amount that it was required to place into escrow in a particular year was greater than the state’s allocable share of the total payments that the manufacturer would have been required to make in that year under the Master Settlement Agreement had it been a participating manufacturer, as such payments are determined under sec. IX(i)(2) of the master settlement agreement and before any of the adjustments or offsets described in sec. IX(i)(3) of that agreement other than the inflation adjustment, the excess shall be released from escrow and revert back to that tobacco product manufacturer; or

“(3) to the extent not released from escrow under (1) or (2) of this subsection, funds placed into escrow shall be released from escrow and revert back to the tobacco product manufacturer 25 years after the date on which they were placed into escrow.”

Under sec. 48(b), ch. 1, FSSLA 2004, this amendment of subsection (b) takes effect “only if AS 45.53.020(b)(2) , as amended in sec. 38 of this Act, and AS 45.53.020(b)(2) , as repealed and reenacted in sec. 39 of this Act, are held by a court of competent jurisdiction to be unconstitutional,” while under sec. 53, ch. 1, FSSLA 2004, “if [the amendment of subsection (b) by] sec. 40 of this Act takes effect under sec. 48(b) of this Act, it takes effect on the day after the date of a final order or decision by a court of competent jurisdiction holding AS 45.53.020(b) , as amended in sec. 39 of this Act, to be unconstitutional.” As of January 2022, the contingencies had not occurred.

Sec. 45.53.030. Regulations.

The commissioner of revenue shall adopt regulations under AS 44.62 (Administrative Procedure Act) necessary to ascertain the amount of excise tax paid on the cigarettes of a tobacco product manufacturer for each year for which the manufacturer is required to place money into a qualified escrow fund under AS 45.53.020 .

History. (§ 2 ch 46 SLA 1999)

Sec. 45.53.040. Certification of compliance; civil actions.

  1. A tobacco product manufacturer that elects to comply with AS 45.53.020 by placing money into escrow under that section shall annually, at the time of compliance, certify to the commissioner of revenue that it is in compliance with AS 45.53.020 .
  2. If the commissioner of revenue does not timely receive a certification of compliance from a tobacco product manufacturer as required by (a) of this section, the commissioner shall notify the attorney general. The attorney general shall require the manufacturer, within 15 days, to place into a qualified escrow fund the money necessary to bring the manufacturer into compliance with AS 45.53.020 . The attorney general may bring a civil action on behalf of the state against a tobacco product manufacturer that fails to place into a qualified escrow fund the money necessary to bring the manufacturer into compliance with AS 45.53.020 . The court, upon a finding of a tobacco product manufacturer’s
    1. violation of AS 45.53.020, shall require the manufacturer, within 15 days, to place into a qualified escrow fund the money necessary to bring the manufacturer into compliance with AS 45.53.020 and may impose a civil penalty, in an amount not to exceed five percent of the amount improperly withheld from escrow, for each day of the violation; the total amount of the penalty under this paragraph may not exceed 100 percent of the original amount improperly withheld from escrow;
    2. knowing violation of AS 45.53.020, shall require the manufacturer, within 15 days, to place into a qualified escrow fund the money necessary to bring the manufacturer into compliance with AS 45.53.020 and may impose a civil penalty, in an amount not to exceed 15 percent of the amount improperly withheld from escrow, for each day of the violation; the total amount of the penalty under this paragraph may not exceed 300 percent of the original amount improperly withheld from escrow; and
    3. second knowing violation of AS 45.53.020, shall require the manufacturer, within 15 days, to place into a qualified escrow fund the money necessary to bring the manufacturer into compliance with AS 45.53.020, and may impose a monetary penalty as described in (2) of this subsection, and shall prohibit the manufacturer from selling cigarettes to consumers within the state, whether directly or through a distributor, retailer, or similar intermediary, for a period not to exceed two years.
  3. In addition to the civil penalties described in (b) of this section, the court may award the state full reasonable attorney fees and costs if the state prevails in a civil action brought under (b) of this section.
  4. Each failure to make an annual placement of money into a qualified escrow fund as required by AS 45.53.020 is a separate violation for the purposes of this section.

History. (§ 2 ch 46 SLA 1999)

Sec. 45.53.100. Definitions.

In this chapter,

  1. “adjusted for inflation” means increased in accordance with the formula for inflation adjustment set out in Exhibit C to the Master Settlement Agreement;
  2. “affiliate” means a person who directly or indirectly owns or controls, is owned or controlled by, or is under common ownership or control with, another person; in this paragraph,
    1. “owns,” “is owned,” and “ownership” mean ownership of an equity interest, or the equivalent thereof, of 10 percent or more;
    2. “person” means an individual, a partnership, a committee, an association, a corporation, or any other organization or group of persons;
  3. “allocable share” means allocable share as that term is defined in the Master Settlement Agreement;
  4. “cigarette”
    1. means any product that contains nicotine, is intended to be burned or heated under ordinary conditions of use, and consists of or contains
      1. any roll of tobacco wrapped in paper or in any substance not containing tobacco;
      2. tobacco, in any form, that is functional in the product, which, because of its appearance, the type of tobacco used in the filler, or its packaging and labeling is likely to be offered to, or purchased by, consumers as a cigarette; or
      3. any roll of tobacco wrapped in any substance containing tobacco which, because of its appearance, the type of tobacco used in the filler, or its packaging and labeling, is likely to be offered to, or purchased by, consumers as a cigarette described in (i) of this subparagraph;
    2. includes “roll-your-own”; for purposes of this subparagraph,
      1. 0.09 ounces of “roll-your-own” tobacco constitutes one individual “cigarette;”
      2. “roll-your-own” includes any tobacco that, because of its appearance, type, packaging, or labeling is suitable for use and likely to be offered to, or purchased by, consumers as tobacco for making cigarettes;
  5. “Master Settlement Agreement” means the settlement agreement and related documents described in AS 45.53.010 ;
  6. “original participating manufacturer” means “original participating manufacturer” as that term is defined in the Master Settlement Agreement;
  7. “qualified escrow fund” means a fund described in AS 45.53.020(c) ;
  8. “released claims” means “released claims” as that term is defined in the Master Settlement Agreement;
  9. “releasing parties” means “releasing parties” as that term is defined in the Master Settlement Agreement;
  10. “tobacco product manufacturer”
    1. means an entity that, on or after June 4, 1999, directly, and not exclusively through an affiliate,
      1. manufactures cigarettes anywhere that such manufacturer intends to be sold in the United States, including cigarettes intended to be sold in the United States through an importer; provided, however, that an entity that manufactures cigarettes that it intends to be sold in the United States shall not be considered to be a tobacco product manufacturer under this clause (i) if, first, such cigarettes are sold in the United States exclusively through an importer that is an original participating manufacturer, as that term is defined in the Master Settlement Agreement, that will be responsible for the payments under the Master Settlement Agreement with respect to such cigarettes as a result of the provisions of sec. II(mm) of the Master Settlement Agreement and that pays the taxes specified in sec. II(z) of the Master Settlement Agreement, and, second, the manufacturer of such cigarettes does not market or advertise such cigarettes in the United States;
      2. is the first purchaser anywhere for resale in the United States of cigarettes manufactured anywhere that the manufacturer does not intend to be sold in the United States; or
      3. becomes a successor of an entity described in (i) or (ii) of this subparagraph;
    2. does not include an affiliate of an entity described in (A) of this paragraph unless the affiliate itself meets the standards set out in any of (A)(i) — (iii) of this paragraph;
  11. “units sold” means the number of individual cigarettes sold in the state by the applicable tobacco product manufacturer, whether directly or through a distributor, retailer, or similar intermediary or intermediaries, during the year in question, as measured by excise taxes collected by the state on packs or “roll-your-own” tobacco containers.

History. (§ 2 ch 46 SLA 1999)

Revisor’s notes. —

Enacted as AS 45.53.990. Renumbered in 1999.

Chapter 55. Alaska Native Claims Settlement Act Corporations Proxy Solicitations and Stock.

Sec. 45.55.010. Sales and purchases.

History. [Repealed, § 29 ch 65 SLA 2018.]

Sec. 45.55.020. Advisory activities.

History. [Repealed, § 29 ch 65 SLA 2018.]

Sec. 45.55.023. Unethical business practices of state investment advisers, investment adviser representatives, and federal covered advisers.

History. [Repealed, § 29 ch 65 SLA 2018.]

Sec. 45.55.025. Fraudulent, dishonest, and unethical business practices of broker-dealers and agents.

History. [Repealed, § 29 ch 65 SLA 2018.]

Sec. 45.55.027. Additional fraudulent, dishonest, and unethical business practices of agents.

History. [Repealed, § 29 ch 65 SLA 2018.]

Sec. 45.55.028. Practices of broker-dealers and agents considered fraudulent or deceitful.

History. [Repealed, § 29 ch 65 SLA 2018.]

Sec. 45.55.030. Registration requirements; referrals.

History. [Repealed, § 29 ch 65 SLA 2018.]

Sec. 45.55.035. Limited registration of Canadian broker-dealers and agents.

History. [Repealed, § 29 ch 65 SLA 2018.]

Sec. 45.55.040. Registration procedure; notice filing.

History. [Repealed, § 29 ch 65 SLA 2018.]

Sec. 45.55.050. Post-registration provisions.

History. [Repealed, § 29 ch 65 SLA 2018.]

Sec. 45.55.060. Denial, revocation, suspension, cancellation, and withdrawal of registration.

History. [Repealed, § 29 ch 65 SLA 2018.]

Sec. 45.55.070. Registration requirement.

History. [Repealed, § 29 ch 65 SLA 2018.]

Sec. 45.55.075. Federal covered securities.

History. [Repealed, § 29 ch 65 SLA 2018.]

Sec. 45.55.080. Registration by notification.

History. [Repealed, § 29 ch 65 SLA 2018.]

Sec. 45.55.090. Registration by coordination.

History. [Repealed, § 29 ch 65 SLA 2018.]

Sec. 45.55.100. Registration by qualification.

History. [Repealed, § 29 ch 65 SLA 2018.]

Sec. 45.55.110. Provisions applicable to registration and notice filings.

History. [Repealed, § 29 ch 65 SLA 2018.]

Sec. 45.55.120. Denial, suspension, and revocation of registration.

History. [Repealed, § 29 ch 65 SLA 2018.]

Sec. 45.55.130. [Renumbered as AS 45.55.990.]

Sec. 45.55.138. Application to Alaska Native Claims Settlement Act corporations.

The initial issue of stock of a corporation organized under Alaska law under 43 U.S.C. 1601 et seq. (Alaska Native Claims Settlement Act) is not a sale of a security under AS 45.56.100 and 45.56.900 (29).

History. (§ 6 ch 70 SLA 1972; am § 60 ch 56 SLA 2005; am § 15 ch 65 SLA 2018)

Revisor's notes. —

In 2018, in (a) of this section, “AS 45.56.100 ” was substituted for “AS 45.56.105” to reflect the 2018 renumbering of that section.

Cross references. —

For purpose of the Act enacting this section, see § 1, ch. 70, SLA 1972 in the Temporary and Special Acts.

Administrative Code. —

For Alaska native claims act corporations: solicitation of proxies, see 3 AAC 8, art. 3.

Effect of amendments. —

The 2018 amendment, effective January 1, 2018, substituted “under 43 U.S.C. 1601 et seq.” for “pursuant to 43 U.S.C. 1601 et seq.”, and “under AS 45.56.105 [now AS 45.56.100 ] and AS 45.56.900 (29)” for “under AS 45.55.070 and 45.55.990 (28)”.

Notes to Decisions

Cited in

Ahmasuk v. State, 478 P.3d 665 (Alaska 2021).

Sec. 45.55.139. Reports of corporations.

A copy of all annual reports, proxies, consents or authorizations, proxy statements, and other materials relating to proxy solicitations distributed, published, or made available by any person to at least 30 Alaska resident shareholders of a corporation organized under Alaska law under 43 U.S.C. 1601 et seq. (Alaska Native Claims Settlement Act) that has total assets exceeding $1,000,000 and a class of equity security held of record by 500 or more persons shall be filed with the administrator concurrently with its distribution to shareholders.

History. (§ 1 ch 58 SLA 1977; am § 49 ch 3 SLA 2017; am § 16 ch 65 SLA 2018)

Administrative Code. —

For Alaska Native Claims Act Corporations: solicitation of proxies, see 3 AAC 8, art. 3.

Effect of amendments. —

The 2018 amendment, effective January 1, 2019, inserted “organized under Alaska law under 43 U.S.C. 1601 et seq. (Alaska Native Claims Settlement Act)” following “shareholders of a corporation”, and deleted “and that is exempted from the registration requirements of AS 45.55.070 by AS 445.55.138” following “500 or more persons”.

Notes to Decisions

Proxy solicitations held materially false. —

Where the misrepresented ability of a regional corporation to distribute money or land to shareholders on the large scale expressed in the solicitation would be likely to influence shareholders to grant proxies to the solicitor, the proxy solicitations were materially false as a matter of law. Brown v. Ward, 593 P.2d 247 (Alaska 1979).

Stated in

Ahmasuk v. State, 478 P.3d 665 (Alaska 2021).

Sec. 45.55.140. [Renumbered as AS 45.55.900.]

Sec. 45.55.150. Sales and advertising literature.

History. [Repealed, § 29 ch 65 SLA 2018.]

Sec. 45.55.155. Viatical settlement interests.

History. [Repealed, § 29 ch 65 SLA 2018.]

Sec. 45.55.160. Misleading filings.

A person may not, in a document filed with the administrator or in a proceeding under this chapter, make or cause to be made an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading.

History. (§ 304 ch 198 SLA 1959; am § 15 ch 86 SLA 1972)

Administrative Code. —

For Alaska native claims act corporations: solicitation of proxies, see 3 AAC 8, art. 3.

Notes to Decisions

Materiality under common law. —

Under Alaska common law, a misrepresentation is material if there is a substantial likelihood that a reasonable shareholder would consider it important in deciding how to vote. Subjective proof that one or more shareholders actually granted a proxy because of a falsehood is not required; only the objective standard encompassed in the definition of materiality need be met. Brown v. Ward, 593 P.2d 247 (Alaska 1979).

Proxy solicitations held materially false. —

Where the misrepresented ability of a regional corporation to distribute money or land to shareholders on the large scale expressed in the solicitation would be likely to influence shareholders to grant proxies to the solicitor, the proxy solicitations were materially false as a matter of law. Brown v. Ward, 593 P.2d 247 (Alaska 1979).

Where shareholders ran as candidates for Alaska Native regional corporation’s board, and the corporation sued the shareholders for materially false or misleading proxy solicitation statements, some of those proxy solicitation statements were materially false as a matter of law. Meidinger v. Koniag, Inc., 31 P.3d 77 (Alaska 2001).

Proxy solicitations held not materially false. —

Trial court did not err in finding that the totality of the information provided by the corporation in proxy solicitations was not materially misleading; under this section of the Alaska Securities Act, the trial judge did not wrongly impose a scienter requirement in deciding the issue of materiality of the misrepresentations, and did not err in finding that the information omitted from the corporation’s preliminary packet and post-solicitation oral communications was not material. Skaflestad v. Huna Totem Corp., 76 P.3d 391 (Alaska 2003).

Attorney fees. —

In a corporation’s suit successfully challenging as false and misleading proxy solicitations that inaccurately suggested the corporation was being liquidated and was denying shareholders their rights, a personal interest in election as a director motivated unsuccessful counterclaims alleging unfair election procedures; award of attorney fees under the Alaska R. Civ. Proc. 82 fee schedule was proper. Rude v. Cook Inlet Region, Inc., 294 P.3d 76 (Alaska 2012).

Quoted in

Ahmasuk v. State, 478 P.3d 665 (Alaska 2021).

Collateral references. —

53 C.J.S. Licenses, § 84.

Attorney’s preparation of legal document incident to sale of securities as rendering him liable under state securities regulation statutes, 62 ALR3d 252.

Sec. 45.55.170. Unlawful representations concerning registration or exemption.

History. [Repealed, § 29 ch 65 SLA 2018.]

Sec. 45.55.175. Exemption for certain security sales and offerings.

History. [Repealed, § 29 ch 65 SLA 2018.]

Secs. 45.55.180 — 45.55.260. [Renumbered as AS 45.55.905 — 45.55.980.]

Sec. 45.55.265. Accounting and disposition of fees. [Repealed, § 28 ch 90 SLA 1991.]

Sec. 45.55.270. [Renumbered as AS 45.55.995.]

Sec. 45.55.900. Exemptions.

History. [Repealed, § 29 ch 65 SLA 2018.]

Sec. 45.55.905. Administration of chapter.

  1. The Department of Commerce, Community, and Economic Development shall administer this chapter.
  2. The administrator or an officer or employee of the administrator may not use for personal benefit information that is filed with or obtained by the administrator and that is not made public.  No provision of this chapter authorizes the administrator or an officer or employee of the administrator to disclose the information except among themselves or when necessary or appropriate in a proceeding or investigation under this chapter. No provision of this chapter either creates or derogates from any privilege that exists at common law or otherwise when documentary or other evidence is sought under a subpoena directed to the administrator or an officer or employee of the administrator.
  3. [Repealed, § 29 ch 65 SLA 2018.]

History. (§ 306 ch 198 SLA 1959; am § 4 ch 11 SLA 2000; am § 29 ch 65 SLA 2018)

Revisor’s notes. —

Formerly AS 45.55.180 . Renumbered in 1994.

In 1999, in (a) of this section, “Department of Commerce and Economic Development” was changed to “Department of Community and Economic Development” in accordance with § 88, ch. 58, SLA 1999.

In 2004, in (a) of this section, “Department of Community and Economic Development” was changed to “Department of Commerce, Community, and Economic Development”, in accordance with § 3, ch. 47, SLA 2004.

In 2010, in subsection (c), “AS 21.96.110 ” was substituted for “AS 21.89.110” to reflect the 2010 renumbering of AS 21.89.110.

The 2018 amendment, effective January 1, 2019, repealed (c).

Sec. 45.55.910. Investigations and subpoenas; confidentiality.

  1. The administrator may
    1. make public or private investigations inside or outside this state considered necessary to determine whether a person has violated or is about to violate any provision of this chapter or a regulation or order under this chapter, or to aid in the enforcement of this chapter or in the adopting regulations and forms under this chapter;
    2. require or permit a person to file a statement in writing, under oath or otherwise as the administrator determines, as to all the facts and circumstances concerning the matter to be investigated; and
    3. publish information concerning a violation of this chapter or a regulation or order under this chapter.
  2. For the purpose of an investigation or proceeding under this chapter, the administrator or an officer designated by the administrator may administer oaths and affirmations, subpoena witnesses, compel their attendance, take evidence, and require the production of books, papers, correspondence, memoranda, agreements, or other documents or records that the administrator considers relevant or material to the inquiry.
  3. In case of contumacy by, or refusal to obey a subpoena issued to, a person, the superior court, upon application by the administrator, may issue to the person an order requiring the person to appear before the administrator, or the officer designated by the administrator, to produce documentary evidence if so ordered or to give evidence touching the matter under investigation or in question. Failure to obey the order of the court may be punished by the court as a contempt of court.
  4. A person is not excused from attending and testifying or from producing a document or record before the administrator, or in obedience to the subpoena of the administrator or officer designated by the administrator, or in a proceeding instituted by the administrator, on the ground that the testimony or evidence required of the person may tend to incriminate the person or subject the person to a penalty or forfeiture. However, an individual may not be prosecuted or subjected to a penalty or forfeiture for or on account of a transaction, matter, or thing concerning which the person is compelled, after claiming the privilege against self-incrimination, to testify or produce evidence, documentary or otherwise, except that the individual testifying is not exempt from prosecution and punishment for perjury or contempt committed in testifying.
  5. Notwithstanding AS 45.55.905(b) , all investigative files are confidential, except that they must be disclosed by the administrator as required for discovery in an administrative or a judicial proceeding.

History. (§ 307 ch 198 SLA 1959; am § 47 ch 76 SLA 1999)

Revisor’s notes. —

Formerly AS 45.55.190. Renumbered in 1994.

Administrative Code. —

For registration, notice, and regulation of broker-dealers, agents, state investment advisers, and federal covered advisers, and investment adviser representatives, see 3 AAC 8, art. 1.

Notes to Decisions

Constitutional privileges. —

An individual cannot rely upon the privilege of the fifth amendment of the federal constitution to avoid producing the records of a collective entity that are in his possession in a representative capacity, even if these records might incriminate him personally. Pratt v. Kirkpatrick, 718 P.2d 962 (Alaska 1986).

State’s interest in obtaining an alleged securities dealer’s documents as part of its securities regulatory scheme outweighed any privacy rights violated by their submission where the records sought were all bound to be seen by others in the course of their use, and the other documents were bound to be seen by others in their dissemination to prospective investors. Pratt v. Kirkpatrick, 718 P.2d 962 (Alaska 1986).

An individual cannot rely upon the privilege of Alaska Const., art. I, § 9 to avoid producing partnership records in his possession in a representative capacity. Pratt v. Kirkpatrick, 718 P.2d 962 (Alaska 1986).

Stated in

Ahmasuk v. State, 478 P.3d 665 (Alaska 2021).

Sec. 45.55.915. Reimbursement of expenses incident to examination or investigation.

History. [Repealed, § 29 ch 65 SLA 2018.]

Sec. 45.55.920. Orders, injunctions, and civil penalties.

  1. If it appears to the administrator that a person has engaged or is about to engage in an act or practice in violation of a provision of this chapter or regulation or order under this chapter, the administrator may
    1. in the public interest issue an order
      1. directing the person to cease and desist from continuing the act or practice;
      2. directing the person, for a period not to exceed three years, to file the annual reports, proxies, consents or authorizations, proxy statements, or other materials relating to proxy solicitations required under AS 45.55.139 with the administrator for examination and review 10 working days before a distribution to shareholders; and
      3. voiding the proxies obtained by a person required to file under AS 45.55.139 , including their future exercise or actions resulting from their past exercise, if the proxies were solicited by means of an untrue or misleading statement prohibited under AS 45.55.160 ; or
    2. bring an action in the superior court to enjoin the acts or practices and to enforce compliance with this chapter or regulation or order under this chapter, and upon a proper showing, the appropriate remedy must be granted and a receiver or conservator may be appointed for the defendant or the defendant’s assets; the court may not require the administrator to post a bond.
  2. The administrator may issue an order against a person who knowingly violates this chapter or a regulation or order of the administrator under this chapter, imposing a civil penalty of not more than $2,500 for a single violation, or not more than $25,000 for multiple violations, in a single proceeding or a series of related proceedings.
  3. For violations not covered by (b) of this section, the administrator may issue an order against a person who violates this chapter or a regulation or order of the administrator under this chapter, imposing a civil penalty of not more than $500 for a single violation, or not more than $5,000 for multiple violations, in a single proceeding or a series of related proceedings.
  4. Before issuing an order under (a)(1), (b), or (c) of this section, the administrator shall give reasonable notice of and an opportunity for a hearing. However, the administrator may issue a temporary order under (a)(1) of this section pending the hearing, which remains in effect until 10 days after the hearing is held and which becomes final if the person to whom notice is addressed does not request a hearing within 15 days after the receipt of notice.
  5. After an order issued by the administrator under (b) or (c) of this section becomes final and all rights of appeal are exhausted, the administrator may petition the superior court to enter a judgment against a person who is a respondent in the order for the amount of the civil penalty levied against the person. Subject to AS 44.62.570 , the filing of the petition for a judgment does not reopen the final order to further substantive review unless the court orders otherwise. A judgment entered under this subsection may be executed on and levied under in the manner provided in AS 09.35.

History. (§ 308 ch 198 SLA 1959; am § 1 ch 126 SLA 1968; am § 1 ch 65 SLA 1981; am § 107 ch 59 SLA 1982; am § 2 ch 87 SLA 1988; am § 49 ch 76 SLA 1999; am §§ 17 — 19 ch 65 SLA 2018)

Revisor's notes. —

Formerly AS 45.55.200. Renumbered in 1994.

Effect of amendments. —

The 2018 amendment, effective January 1, 2019, in the introductory language in (a)(1), deleted “or for the protection of investors,” following “in the public interest”; in (b), substituted “order against a person who knowingly violates this chapter” for “order against an applicant, registered person, or other person who knowingly or intentionally violates this chapter” following “administrator may issue an”; in (c), substituted “an order against a person” for “an order against an applicant, registered person, or other person” following “the administrator may issue”.

Notes to Decisions

Quoted in

Ahmasuk v. State, 478 P.3d 665 (Alaska 2021).

Sec. 45.55.925. Criminal penalties.

  1. In addition to the civil penalties assessed under AS 45.55.920 , a person who wilfully violates a provision of this chapter except AS 45.55.160 , or who wilfully violates a regulation or order under this chapter, or who wilfully violates AS 45.55.160 knowing the statement made to be false or misleading in a material respect or the omission to be misleading by any material respect, upon conviction, is punishable by a fine of not more than $5,000, or by imprisonment for not less than one year nor more than five years, or both. Upon conviction of an individual for a felony under this chapter, imprisonment for not less than one year is mandatory. However, an individual may not be imprisoned for the violation of a regulation or order if the individual proves that the individual had no knowledge of the regulation or order. An indictment or information may not be returned under this chapter more than five years after the alleged violation.
  2. The administrator may refer the evidence that is available concerning violations of this chapter or a regulation or order under this chapter to the attorney general who may, with or without a reference, institute appropriate criminal proceedings under this chapter.
  3. Nothing in this chapter limits the power of the state to punish a person for conduct that constitutes a crime by statute or at common law.

History. (§ 309 ch 198 SLA 1959; am § 40 ch 43 SLA 1964; am § 17 ch 86 SLA 1972; am § 3 ch 87 SLA 1988; am § 50 ch 76 SLA 1999; am § 20 ch 65 SLA 2018)

Revisor's notes. —

Formerly AS 45.55.210. Renumbered in 1994.

Effect of amendments. —

The 2018 amendment, effective January 1, 2019, in (a), substituted “except AS 45.55.160 ” for “except AS 45.55.030(e), 45.55.040(h), 45.55.075 , or 45.55.160 ” following “a provision of this chapter”.

Notes to Decisions

“Willfully” as used in subsection (a) of this section requires an awareness of wrongdoing. Hentzner v. State, 613 P.2d 821 (Alaska 1980).

Instructions. —

The trial court’s use of criminal recklessness as a measure of the criminal intent requirement applicable to defendant’s charges of selling unregistered securities fully complied with the court’s duty to inform the jury that defendant could be convicted only if he acted with an awareness of wrongdoing. Wheeler v. State, 659 P.2d 1241 (Alaska Ct. App. 1983).

In prosecution for selling unregistered securities, the advice of counsel instruction given by the trial court adequately apprised defendant’s jury of the relationship between reliance on advice of counsel and the element of willfulness. Wheeler v. State, 659 P.2d 1241 (Alaska Ct. App. 1983).

The trial court did not err in refusing to give a proposed instruction stating that a good faith belief on defendant’s part that he was not offering a security for sale would be a defense where the trial court did give a more specific instruction that good faith reliance on advice of an attorney would constitute a defense to the counts charging defendant with sale of unregistered securities. Wheeler v. State, 659 P.2d 1241 (Alaska Ct. App. 1983).

Successive prosecutions for same transaction. —

Where defendant’s perjury and misleading securities filings were not the same act as the mail fraud for which she was convicted in federal court, AS 12.20.010 did not bar the state from pursuing its indictment in state court for the perjury and misleading securities filings charges, because AS 12.20.010 does not forbid successive prosecutions for offenses arising from the same transaction or episode; rather, it forbids successive prosecutions for offenses based on the same criminal act. State v. Bonham, 28 P.3d 303 (Alaska Ct. App. 2001).

Sec. 45.55.930. Civil liability to buyers.

History. [Repealed, § 29 ch 65 SLA 2018.]

Sec. 45.55.935. Hearings.

  1. The administrator shall adopt regulations, consistent with the provisions of this chapter and with regulations adopted under AS 44.64.060 , governing administrative hearings conducted by the office of administrative hearings (AS 44.64.010 ) for orders issued under AS 45.55.920 .
  2. [Repealed, § 29 ch. 65 SLA 2018.]

History. (§ 4 ch 132 SLA 1977; am § 55 ch 76 SLA 1999; am § 85 ch 163 SLA 2004; am §§ 21, 29 ch 65 SLA 2018)

Revisor's notes. —

Formerly AS 45.55.225. Renumbered in 1994.

Effect of amendments. —

The 2018 amendment, effective January 1, 2019, rewrote (a); repealed (b)

Sec. 45.55.940. Judicial review of orders.

  1. A person aggrieved by a final order of the administrator may obtain a review of the order in the superior court by filing, in accordance with the Rules of Appellate Procedure, a notice of appeal.  A copy of the notice of appeal shall be served immediately upon the administrator, and thereupon the administrator shall certify and file in court a copy of the filing and evidence upon which the order was entered.  When these are filed, the court has exclusive jurisdiction to affirm, modify, enforce, or set aside the order, in whole or in part.
  2. The commencement of proceedings under (a) of this section does not, unless specifically ordered by the court, operate as a stay of the administrator’s order.

History. (§ 311 ch 198 SLA 1959; am § 5 ch 132 SLA 1977; am § 128 ch 6 SLA 1984)

Revisor’s notes. —

Formerly AS 45.55.230. Renumbered in 1994. Former subsection (c) was renumbered as AS 45.55.245 in 1986 and renumbered again in 1994 as AS 45.55.960 .

Cross references. —

For court rules governing appeals from administrative agencies, see Appellate Rules 601 — 611.

Legislative history reports. —

For statement of the purpose of 1984 amendment to subsection (a) of this section, see the 1984 House Journal at p. 2293, in the paragraph captioned “Section 128.”

Notes to Decisions

Procedural defects held fatal on appeal. —

Shareholders were precluded from challenging a consent decree among a corporation, its board of directors, and the Division of Banking, Securities, and Corporations in an administrative action pertaining to proxy disclosure violations; the decree expressly stated that it was the final decision, and the shareholders did not follow the procedures provided in this section. Brown v. Dick, 107 P.3d 260 (Alaska), modified, — P.3d — (Alaska 2005).

Sec. 45.55.950. Regulations, forms, orders, and hearings.

  1. The administrator may make, adopt, amend, and rescind the regulations, forms, and orders that are necessary to carry out this chapter.
  2. A regulation, form, or order may not be made, adopted, amended, or rescinded unless the administrator finds that the action is necessary or appropriate in the public interest.
  3. All financial statements shall be prepared in accordance with generally accepted accounting practices.  The administrator may by regulation or order prescribe
    1. the form and content of financial statements required under this chapter;
    2. the circumstances under which consolidated financial statements shall be filed; and
    3. whether any required financial statements shall be certified by independent or certified public accountants.
  4. A provision of this chapter imposing liability does not apply to an act done or omitted in good faith in conformity with a regulation, form, or order of the administrator, notwithstanding that the regulation, form, or order may be later amended or rescinded or be determined by judicial or other authority to be invalid.
  5. Every hearing in an administrative proceeding shall be public unless the administrative law judge, in the exercise of discretion, grants a request joined in by all the respondents that the hearing be conducted privately.

History. (§ 312 ch 198 SLA 1959; am § 86 ch 163 SLA 2004; am §§ 22, 23 ch 65 SLA 2018)

Revisor's notes. —

Formerly AS 45.55.240. Renumbered in 1994.

Administrative Code. —

For registration, notice, and regulation of broker-dealers, agents, state investment advisers, and federal covered advisers, and investment adviser representatives, see 3 AAC 8, art. 1.

For registration and notice of securities, see 3 AAC 8, art. 2.

For “Regulation D” registration and notice procedure, see 3 AAC 8, art. 4.

For small corporate offering registration SCOR procedure, see 3 AAC 8, art. 5.

For viatical settlement interests, see 3 AAC 8, art. 6.

Effect of amendments. —

The 2018 amendment, effective January 1, 2019, in (a), deleted “, including regulations and forms governing registration statements, applications, and reports, and defining terms, whether or not used in this chapter insofar as the definitions are not inconsistent with this chapter for the purpose of regulations and forms, the administrator may classify securities, persons, and matters within the jurisdiction of the administrator, and prescribe different requirements for different classes” at the end of the subsection; in (b), deleted “or for the protection of investors and consistent with the purposes fairly intended by the policy and provisions of this chapter. In adopting regulations and forms the administrator may cooperate with the securities administrators of the other states and the securities and exchange commission with a view to effectuating the policy of this section to achieve maximum uniformity in the form and content of registration statements, applications, and reports wherever practicable” at the end of the subsection.

Sec. 45.55.960. Administrative Procedure Act applies.

AS 44.62 (Administrative Procedure Act) applies to all regulations adopted or authorized under this chapter.

History. (§ 311 ch 198 SLA 1959; am § 5 ch 132 SLA 1977)

Revisor’s notes. —

Formerly AS 45.55.230(c). Renumbered as AS 45.55.245 in 1986. Renumbered again in 1994.

Sec. 45.55.970. Administrative files and opinions.

History. [Repealed, § 29 ch 65 SLA 2018.]

Sec. 45.55.980. Applicability of the chapter; service of process.

History. [Repealed, § 29 ch 65 SLA 2018.]

Sec. 45.55.990. Definitions.

In this chapter, unless the context otherwise requires,

  1. “administrator” means the commissioner of commerce, community, and economic development or a designee of the commissioner;
  2. “person” has the meaning given in AS 45.56.900 .

History. (§ 301 ch 198 SLA 1959; am §§ 1 and 2 ch 105 SLA 1961; am § 9 ch 5 SLA 1966; am §§ 9, 10 ch 86 SLA 1972; am § 1 ch 217 SLA 1975; am §§ 14, 108 ch 218 SLA 1976; am § 2 ch 56 SLA 1978; am § 2 ch 69 SLA 1980; am § 3 ch 99 SLA 1994; am §§ 64 — 69, 71 ch 76 SLA 1999; am § 13 ch 3 SLA 2000; am §§ 5, 6 ch 11 SLA 2000; am § 5 ch 56 SLA 2016; am § 24 ch 65 SLA 2018)

Revisor's notes. —

Formerly AS 45.55.130 . Renumbered in 1994.

Administrative Code. —

For registration, notice, and regulation of broker-dealers, agents, state investment advisers, and federal covered advisers, and investment adviser representatives, see 3 AAC 8, art. 1.

For viatical settlement interests, see 3 AAC 8, art. 6.

Effect of amendments. —

The 2018 amendment, effective January 1, 2019, rewrote the section.

Notes to Decisions

Investment contract. —

Contracts in February, to sell no more than 2,000 ounces of gold at considerably below the market price of $80 per ounce, delivery to be within six to eight months, with the money to be used to finance mining to begin in the spring, fell squarely within the definition of an investment contract and were therefore securities. Hentzner v. State, 613 P.2d 821 (Alaska 1980).

Security. —

Bankruptcy court did not err when it found that a debtor who transferred $200,000 he received from a creditor so he could obtain financing on a construction project to a leveraged investment platform instead of keeping his promise to place the funds in escrow did not violate AS 45.50.471 45.50.561 , or former AS 45.55.010 — 45.55.995 [see now AS 45.56], because he was not engaged in selling goods in trade or commerce and did not sell securities; however, the debt the debtor owed the creditor was nondischargeable under 11 U.S.C.S. § 523 because he knowingly breached his promise to place the funds in escrow. Keeton v. Flanagan (In re Flanagan), — B.R. — (B.A.P. 9th Cir. Feb. 26, 2014), aff'd, 642 Fed. Appx. 784 (9th Cir. 2016).

Vending machine sales program as investment contract. —

Sufficient evidence was presented to support a jury finding that vending machine sales program was an investment contract where the company, through advertisements, verbal representations to potential investors, and various investment documents prepared and signed by defendant acting as a corporate officer and by the sales agent, sold a package of contractual benefits which included, in addition to vending machines themselves, the precise experience, expertise, and resources necessary to assure profits from the machines. Wheeler v. State, 659 P.2d 1241 (Alaska Ct. App. 1983).

Territorial distributorships must be registered. —

Territorial distributorships constitute an investment contract and are securities subject to registration. American Gold & Diamond Corp. v. Kirkpatrick, 678 P.2d 1343 (Alaska 1984).

Promissory notes held to be securities. —

Promissory notes sold by a not-for-profit corporation to finance fund-raising activities are securities within the meaning of subsection (12)(now (32)) of this section where 1) the lenders believed they would be repaid, 2) the interest offered on the note was higher than the interest the lenders were earning on their investments, 3) the plan of distribution of the notes was coordinated and national in scope, 4) the notes were not collateralized or insured, and 5) the scheme was found to be fraudulent. Caucus Distribs., Inc. v. DOC & Econ. Dev., 793 P.2d 1048 (Alaska 1990).

Collateral references. —

Who is “dealer” under state securities acts exempting sales by owners other than issuers not made in course of successive transactions, and the like, 6 ALR3d 1425.

What constitutes “public” or “private” offering within meaning of state securities regulation, 84 ALR3d 1009.

Chapter 56. Alaska Securities Act.

History. (§ 25 ch 65 SLA 2018)

Revisor's notes. —

For provision relating to applicability of former AS 45.55 to existing proceedings and rights and duties pending before January 1, 2019; to registrations, orders, regulations, statements of policy, interpretative opinions, declaratory rulings, no action determinations, and registration conditions remaining in effect; and to certain offers and sales within one after January 1, 2019, see sec. 32, ch. 65, SLA 2018, in the 2018 Temporary and Special Acts.

Administrative Code. —

For securities, see 3 AAC 08.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this chapter effective January 1, 2019.

Collateral references. —

Martin L. Fried, Taxation of Securities Transactions (Matthew Bender).

Article 1. Registration of Securities; Exemptions; Notice Filing of Federal Covered Securities.

History. (§ 25 ch 65 SLA 2018)

Sec. 45.56.100. Securities registration requirement.

A person may not offer or sell a security in this state unless

  1. the security is a federal covered security;
  2. the security is registered under this chapter; or
  3. the security or transaction is exempt from registration under AS 45.56.110 45.56.160 .

History. (§ 25 ch 65 SLA 2018)

Revisor's notes. —

Enacted as AS 45.56.105; renumbered in 2018, at which time references to other renumbered sections were conformed.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.110. Exempt securities.

The following securities are exempt from the requirements of AS 45.56.100 , 45.56.170 45.56.230 , and 45.56.550 :

  1. a security, including a revenue obligation or a separate security as defined in  17 C.F.R. 230.131 adopted under 15 U.S.C. 77a — 77aa (Securities Act of 1933), issued, insured, or guaranteed by the United States; by a state; by a political subdivision of a state; by a public authority, agency, or instrumentality of one or more states; by a political subdivision of one or more states; or by a person controlled or supervised by and acting as an instrumentality of the United States under authority granted by the United States Congress; or a certificate of deposit for any of the foregoing;
  2. a security issued, insured, or guaranteed by a foreign government with which the United States maintains diplomatic relations, or by any of its political subdivisions, if the security is recognized as a valid obligation by the issuer, insurer, or guarantor;
  3. a security issued by and representing, or that will represent an interest in or a direct obligation of or be guaranteed by,
    1. an international banking institution;
    2. a banking institution organized under the laws of the United States; a member bank of the Federal Reserve System; or a depository institution a substantial portion of the business of which consists or will consist of receiving deposits or share accounts that are insured to the maximum amount authorized by statute by the Federal Deposit Insurance Corporation, the National Credit Union Share Insurance Fund, or a successor authorized by federal law or exercising fiduciary powers that are similar to those permitted for national banks under the authority of the United States Comptroller of the Currency under 12 U.S.C. 92a; or
    3. any other depository institution, unless, by a regulation or order, the administrator proceeds under AS 45.56.160 ;
  4. a security issued by and representing an interest in, or a debt of, or insured or guaranteed by, an insurance company authorized to do business in this state;
  5. a security issued or guaranteed by a railroad, other common carrier, public utility, or public utility holding company that is
    1. regulated with respect to its rates and charges by the United States or a state;
    2. regulated with respect to the issuance or guarantee of the security by the United States, a state, Canada, or a Canadian province or territory; or
    3. a public utility holding company registered under 42 U.S.C. 16451 — 16481 (Energy Policy Act of 2005) or a subsidiary of the registered holding company within the meaning of that Act;
  6. a federal covered security specified in 15 U.S.C. 77r(b)(1) (Securities Act of 1933) or adopted by rule under that provision or a security listed or approved for listing on another securities market specified by regulation under this chapter; a put or call option contract; a warrant; a subscription right on or with respect to the security; an option or similar derivative security on a security or an index of securities or foreign currencies issued by a clearing agency registered under 15 U.S.C. 78a — 78pp (Securities Exchange Act of 1934) and listed or designated for trading on a national securities exchange, a facility of a national securities exchange, or a facility of a national securities association registered under 15 U.S.C. 78a — 78pp (Securities Exchange Act of 1934) or an offer or sale of the underlying security in connection with the offer, sale, or exercise of an option or other security that was exempt when the option or other security was written or issued; or an option or a derivative security designated by the Securities and Exchange Commission under 15 U.S.C. 78i(b) (Securities Exchange Act of 1934);
  7. a security issued by a person organized and operated exclusively for religious, educational, benevolent, fraternal, charitable, social, athletic, or reformatory purposes, or as a chamber of commerce, and not for pecuniary profit, no part of the net earnings of which inures to the benefit of a private stockholder or other person, or a security of a company that is excluded from the definition of an investment company under 15 U.S.C. 80a-3(c)(10)(B) (Investment Company Act of 1940), except that, with respect to the offer or sale of a note, bond, debenture, or other evidence of indebtedness issued by the person, a regulation may be adopted under this chapter limiting the availability of this exemption by classifying securities, persons, and transactions, imposing different requirements for different classes, specifying, with respect to (B) of this paragraph, the scope of the exemption and the grounds for denial or suspension, and requiring an issuer to
    1. file a notice specifying the material terms of the proposed offer or sale and copies of any proposed sales and advertising literature to be used and provide that the exemption becomes effective if the administrator does not disallow the exemption within the period established by the regulation;
    2. file a request for exemption authorization for which a regulation adopted under this chapter may specify the
      1. scope of the exemption;
      2. requirement of an offering statement;
      3. filing of sales and advertising literature;
      4. filing of consent to service of process complying with AS 45.56.650 ; and
      5. grounds for denial or suspension of the exemption; or
    3. register under AS 45.56.180 ;
  8. a member’s or owner’s interest in, or a retention certificate or like security given in lieu of a cash patronage dividend issued by, a cooperative organized and operated as a nonprofit membership cooperative under the cooperative laws of a state, but not a member’s or owner’s interest, retention certificate, or like security sold to persons other than bona fide members of the cooperative;
  9. an equipment trust certificate with respect to equipment leased or conditionally sold to a person if any security issued by the person would be exempt under this section or would be a federal covered security under 15 U.S.C. 77r(b)(1) (Securities Act of 1933); and
  10. shares of membership stock in the Alaska Commercial Fishing and Agriculture Bank issued under  AS 44.81.010 and other securities issued by that bank to members or in connection with loans to members.

History. (§ 25 ch 65 SLA 2018)

Revisor's notes. —

Enacted as AS 45.56.205; renumbered in 2018, at which time references to other renumbered sections were conformed.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.120. Exempt transactions.

The following transactions are exempt from the requirements of AS 45.56.100 , 45.56.170 45.56.230 , and 45.56.550 :

  1. an isolated nonissuer transaction, whether effected by or through a broker-dealer, if the seller is not a promoter or controlling person; the administrator may define by regulation or order who is a promoter or a controlling person;
  2. a nonissuer transaction by or through a broker-dealer registered, or exempt from registration under this chapter, and a resale transaction by a sponsor of a unit investment trust registered under 15 U.S.C. 80a-1 — 80a-64 (Investment Company Act of 1940), in a security of a class that has been outstanding in the hands of the public for at least 90 days, if, at the date of the transaction,
    1. the issuer of the security is engaged in business, the issuer is not in the organizational stage or in bankruptcy or receivership, and the issuer is not a blank check, blind pool, or shell company that does not have a specific business plan or purpose or has indicated that its primary business plan is to engage in a merger or combination of the business with or an acquisition of an unidentified person;
    2. the security is sold at a price reasonably related to its current market price;
    3. the security does not constitute the whole or part of an unsold allotment to or a subscription or participation by the broker-dealer as an underwriter of the security or a redistribution;
    4. a nationally recognized securities manual or its electronic equivalent designated by a regulation adopted or order issued under this chapter or a record filed with the Securities and Exchange Commission that is publicly available contains
      1. a description of the business and operations of the issuer;
      2. the names of the issuer’s executive officers and the names of the issuer’s directors, if any;
      3. an audited balance sheet of the issuer as of a date within 18 months before the date of the transaction or, in the case of a reorganization or merger when the parties to the reorganization or merger each had an audited balance sheet, a pro forma balance sheet for the combined organization; and
      4. an audited income statement for each of the issuer’s two immediately previous fiscal years or for the period of existence of the issuer, whichever is shorter, or, in the case of a reorganization or merger when each party to the reorganization or merger had audited income statements, a pro forma income statement; and
    5. any one of the following requirements is met:
      1. the issuer of the security has a class of equity securities listed on a national securities exchange registered under 15 U.S.C. 78f (Securities Exchange Act of 1934) or designated for trading on the National Association of Securities Dealers Automated Quotation System;
      2. the issuer of the security is a unit investment trust registered under 15 U.S.C.  80a-1 — 80a-64 (Investment Company Act of 1940);
      3. the issuer of the security, including its predecessors, has been engaged in continuous business for at least three years; or
      4. the issuer of the security has total assets of at least $2,000,000 based on an audited balance sheet as of a date within 18 months before the date of the transaction or, in the case of a reorganization or merger when the parties to the reorganization or merger each had an audited balance sheet, a pro forma balance sheet for the combined organization;
  3. a nonissuer transaction by or through a broker-dealer registered or exempt from registration under this chapter in a security of a foreign issuer that is a margin security defined in regulations or rules adopted by the Board of Governors of the Federal Reserve System;
  4. a nonissuer transaction by or through a broker-dealer registered or exempt from registration under this chapter in an outstanding security if the guarantor of the security files reports with the Securities and Exchange Commission under the reporting requirements of 15 U.S.C. 78m or 15 U.S.C. 78o (Securities Exchange Act of 1934);
  5. a nonissuer transaction by or through a broker-dealer registered or exempt from registration under this chapter in a security that
    1. is rated at the time of the transaction by a nationally recognized statistical rating organization as identified by regulations of the administrator in one of its four highest rating categories; or
    2. has a fixed maturity or a fixed interest or dividend, if
      1. a default has not occurred during the current fiscal year or within the three previous fiscal years or, if the issuer has been in business less than three fiscal years, during the existence of the issuer and any predecessor in the payment of principal, interest, or dividends on the security; and
      2. the issuer is engaged in business, is not in the organizational stage or in bankruptcy or receivership, and is not and has not, within the previous 12 months, been a blank check, blind pool, or shell company that does not have a specific business plan or purpose or has indicated that its primary business plan is to engage in a merger or combination of the business with, or an acquisition of, an unidentified person;
  6. a nonissuer transaction by or through a broker-dealer registered or exempt from registration under this chapter effecting an unsolicited order or offer to purchase;
  7. a nonissuer transaction executed by a bona fide pledgee without the purpose of evading this chapter;
  8. a nonissuer transaction by a federal covered investment adviser with investments under management in excess of $100,000,000 acting in the exercise of discretionary authority in a signed record for the account of others;
  9. a transaction in a security, whether or not the security or transaction is otherwise exempt, in exchange for one or more bona fide outstanding securities, claims, or property interests, or partly in exchange for one or more bona fide outstanding securities, claims, or property interests and partly for cash if the terms and conditions of the issuance and exchange or the delivery and exchange and the fairness of the terms and conditions have been approved by the administrator after a hearing;
  10. a transaction between the issuer or other person on whose behalf the offering is made and an underwriter, or among underwriters;
  11. a transaction in a bond or other evidence of indebtedness secured by a real or chattel mortgage or deed of trust or by an agreement for the sale of real estate or chattels, if
    1. the entire mortgage, deed of trust, or agreement, together with all the bonds or other evidence of indebtedness, secured under those documents, is offered and sold as a unit;
    2. a general solicitation or general advertisement of the transaction is not made; and
    3. a commission or other remuneration is not paid or given, directly or indirectly, to a person not registered under this chapter as a broker-dealer or as an agent;
  12. a transaction by an executor, administrator of an estate, sheriff, marshal, receiver, trustee in bankruptcy, guardian, or conservator;
  13. a sale or offer to sell to
    1. an institutional investor;
    2. a federal covered investment adviser; or
    3. any other person exempted by a regulation adopted or order issued under this chapter;
  14. a sale or offer to sell securities by or on behalf of an issuer if the transaction is part of a single issue in which
    1. not more than 25 purchasers in this state during any 12 consecutive months, other than a person designated in (13) of this section, regardless of whether the seller or any of the buyers is then present in this state;
    2. a general solicitation or general advertising is not made in connection with the sale of or offer to sell the securities;
    3. a commission or other remuneration is not paid or given, directly or indirectly, to a person other than a broker-dealer registered under this chapter or an agent registered under this chapter for soliciting a prospective purchaser in this state;
    4. the issuer reasonably believes that all the purchasers in this state, other than those designated in (13) of this section, are purchasing for investment and not with a view to distribution;
    5. a legend is placed on the certificate or other document evidencing ownership of the security, and the legend states that the security is not registered under this chapter and cannot be resold without registration under this chapter or exemption from this chapter; and
    6. before a sale, each prospective buyer is furnished with information that is sufficient to make an informed investment decision; the information shall be furnished to the administrator upon request; in this subparagraph, “information that is sufficient to make an informed investment decision” includes a business plan, an income and expense statement, a balance sheet, a statement of risks, and a disclosure of any significant negative factors that may affect the outcome of the investment;
  15. a transaction under an offer to existing security holders of the issuer, including persons that, at the date of the transaction, are holders of convertible securities, options, or warrants, if a commission or other remuneration, other than a standby commission, is not paid or given, directly or indirectly, for soliciting a security holder in this state;
  16. an offer to sell, but not a sale of, a security not exempt from registration under 15 U.S.C. 77a — 77aa (Securities Act of 1933) if
    1. a registration, offering statement, or similar record as required under 15 U.S.C.  77a — 77aa (Securities Act of 1933) has been filed but is not effective, or the offer is made in compliance with  17 C.F.R. 230.165, adopted under 15 U.S.C. 77a — 77aa (Securities Act of 1933); and
    2. a stop order of which the offeror is aware has not been issued against the offeror by the administrator or the Securities and Exchange Commission, and an audit, inspection, or proceeding that is public and that may culminate in a stop order is not known by the offeror to be pending;
  17. an offer to sell, but not a sale of, a security exempt from registration under 15 U.S.C.  77a — 77aa (Securities Act of 1933) if
    1. a registration statement has been filed under this chapter but is not effective;
    2. a solicitation of interest is provided in a record to offerees in compliance with a regulation adopted by the administrator under this chapter; and
    3. a stop order of which the offeror is aware has not been issued by the administrator under this chapter, and an audit, inspection, or proceeding that may culminate in a stop order is not known by the offeror to be pending;
  18. a transaction involving the distribution of the securities of an issuer to the security holders of another person in connection with a merger, consolidation, exchange of securities, sale of assets, or other reorganization to which the issuer, or its parent or subsidiary, and the other person, or its parent or subsidiary, are parties;
  19. a rescission offer, sale, or purchase under  AS 45.56.720 ;
  20. an offer to sell or sale of a security to a person not a resident of this state and not present in this state if the offer or sale does not constitute a violation of the laws of this state or foreign jurisdiction in which the offeree or purchaser is present and is not part of an unlawful plan or scheme to evade this chapter;
  21. employees’ stock purchase, savings, option, profit-sharing, pension, or similar benefit plan, including any securities, plan interests, and guarantees issued under a compensatory benefit plan or compensation contract, contained in a record, established by the issuer, the issuer’s parent, the issuer’s majority-owned subsidiary, or the majority-owned subsidiary of the issuer’s parent for the participation of their employees, including offers to sell or sales of the securities to
    1. directors; general partners; managers and members, if the issuer is a limited liability company; trustees, if the issuer is a business trust; officers; consultants; and advisors;
    2. family members who acquire the securities from those persons through gifts or domestic relations orders;
    3. former employees, directors, general partners, trustees, officers, consultants, limited liability managers or members, and advisors if those individuals were employed by or providing services to the issuer when the securities were offered; and
    4. insurance agents who are exclusive insurance agents of the issuer or the issuer’s subsidiary or parent or who derive more than 50 percent of their annual income from those organizations;
  22. a transaction involving
    1. a stock dividend or equivalent equity distribution, regardless of whether the corporation or other business organization distributing the dividend or equivalent equity distribution is the issuer, if nothing of value is given by stockholders or other equity holders for the dividend or equivalent equity distribution other than the surrender of a right to a cash or property dividend if each stockholder or other equity holder may elect to take the dividend or equivalent equity distribution in cash, property, or stock;
    2. a transaction incident to a right of conversion or judicially approved reorganization in which a security is issued in exchange for one or more outstanding securities, claims, or property interests, or partly in exchange for one or more outstanding securities, claims, or property interests and partly for cash; or
    3. the solicitation of tenders of securities by an offeror in a tender offer in compliance with  17 C.F.R. 230.162, adopted under 15 U.S.C. 77a — 77aa (Securities Act of 1933);
  23. a nonissuer transaction in an outstanding security by or through a broker-dealer registered or exempt from registration under this chapter, if the issuer is a reporting issuer in a foreign jurisdiction designated by this paragraph or by a regulation adopted or order issued under this chapter; the issuer has been subject to continuous reporting requirements in the foreign jurisdiction for not less than 180 days before the transaction; and the security is listed on the foreign jurisdiction’s securities exchange that has been designated by this paragraph or by a regulation adopted or order issued under this chapter, or is a security of the same issuer that is of senior or substantially equal rank to the listed security or is a warrant or right to purchase or subscribe to any of the foregoing; for purposes of this paragraph, Canada, together with its provinces and territories, is a designated foreign jurisdiction, and TSX, Inc., formerly known as the Toronto Stock Exchange, Inc., is a designated securities exchange; after an administrative hearing in compliance with  AS 45.56.690(c) , the administrator, by a regulation adopted or order issued under this chapter, may revoke the designation of a securities exchange under this paragraph if the administrator finds that revocation is necessary or appropriate in the public interest and for the protection of investors;
  24. sales by an issuer to the buyer of an enterprise or a business and the assets and liabilities of the enterprise or business if
    1. the transfer of stock to the buyer is solely incidental to the sale of the enterprise or business and its assets and liabilities;
    2. the seller provides the buyer with full access to the books and records of the enterprise or business; and
    3. a legend is placed on the certificate or other document evidencing ownership of the security, stating that the security is not registered under this chapter and cannot be resold without registration under this chapter or exemption from it;
  25. offers or sales of certificates of interest or participation in oil, gas, or mining rights, titles, or leases, or in payments out of production under the rights, titles, or leases, if the purchasers
    1. are or have been, during the preceding two years, engaged primarily in the business of exploring for, mining, producing, or refining oil, gas, or minerals; or
    2. have been found by the administrator upon written application to be substantially engaged in the business of exploring for, mining, producing, or refining oil, gas, or minerals so as not to require the protection provided by this chapter;
  26. a transaction involving only family members, or involving only family members and the corporations, partnerships, limited liability companies, limited partnerships, limited liability partnerships, associations, joint-stock companies, or trusts that are organized, formed, or created by family members or at the direction of family members; in this paragraph, “family members” means persons who are related, including related by adoption, within the fourth degree of affinity or consanguinity; or
  27. a transaction relating to a security that is not part of an initial issue of stock covered by  AS 45.55.138 , but that is issued by a corporation organized under Alaska law under 43 U.S.C.  1601 et seq. (Alaska Native Claims Settlement Act), if the corporation qualifies for exempt status under 43 U.S.C. 1625(a).

History. (§ 25 ch 65 SLA 2018)

Revisor's notes. —

Enacted as AS 45.56.210 ; renumbered in 2018, at which time references to other renumbered sections were conformed.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.130. Small intrastate securities offerings.

  1. An offer or sale of securities conducted solely in this state to a person who has established residency in this state, by an issuer in a transaction that meets the requirements of this section, is exempt from the requirements of 45.56.100 , 45.56.170 45.56.230 , and 45.56.550 and is subject to the following limitations:
    1. the issuer of the security shall be a for-profit corporation, another for-profit entity, or a business cooperative, have its principal place of business in this state, and be licensed by the department;
    2. the transaction must meet the requirements of the federal exemption for intrastate offerings in 15 U.S.C. 77c(a)(11) (Securities Act of 1933) and  17 C.F.R. 230.147; the securities must be offered to and sold only to persons who have established residency in this state at the time of purchase; before any offer or sale under this exemption, the seller shall obtain documentary evidence from each prospective purchaser that provides the seller with a reasonable basis to believe the investor has established residency in this state;
    3. the sum of all cash and other consideration to be received for all sales of the security in reliance on this exemption may not exceed $1,000,000, less the aggregate amount received for all sales of securities by the issuer within the 12 months before the first offer or sale made in reliance on this exemption;
    4. the issuer may not accept more than $10,000 from any single purchaser unless the purchaser is an accredited investor as defined by  17 C.F.R. 230.501;
    5. the issuer reasonably believes that all purchasers of securities are purchasing for investment and not for sale in connection with a distribution of the security;
    6. a commission or remuneration may not be paid or given, directly or indirectly, for any person’s participation in the offer or sale of securities for the issuer unless the person is registered as a broker-dealer, agent, investment adviser representative, or investment adviser under AS 45.56.300 — AS 45.56.350 ;
    7. the issuer of the security shall deposit in an escrow account in a bank or other depository institution authorized to do business in this state all funds received from investors until the minimum target dollar amount for the security offering is met; the issuer shall file the escrow agreement with the administrator, and the contents of the escrow agreement must include a statement that the proceeds of the sale under this section will not be released from the escrow account until the minimum target dollar amount for the security offering is met; all funds shall be used in accordance with representations made to investors;
    8. not less than 10 days before the use of any general solicitation or within 15 days after the first sale of the security under this exemption, if general solicitation has not been used before the sale, whichever occurs first, the issuer shall provide a notice to the administrator as prescribed in regulations for this section; the notice must specify that the issuer is conducting an offering in reliance on this exemption and must contain the names and addresses of
      1. the issuer;
      2. officers, directors, and any controlling person of the issuer;
      3. all persons who will be involved in the offer or sale of securities on behalf of the issuer; and
      4. the bank or other depository institution in which investor funds will be deposited;
    9. the issuer may not be, either before or as a result of the offering,
      1. an investment company as defined by 15 U.S.C. 80a-1 — 80a-64 (Investment Company Act of 1940), or subject to the reporting requirements of 15 U.S.C. 78m or 78o (Securities Exchange Act of 1934); or
      2. a broker-dealer, agent, investment adviser representative, or investment adviser subject to AS 45.56.300 — AS 45.56.350 ;
    10. the issuer shall inform all purchasers that the securities have not been registered under AS 45.56.100 , 45.56.170 45.56.230 , and 45.56.550 and may not be resold unless the securities are registered or qualify for an exemption from registration under AS 45.56.110 , 45.56.120 , or 45.56.150 ; in addition, the issuer shall make the disclosures required by  17 C.F.R. 230.147(f);
    11. the issuer shall require all purchasers to sign the following statement at the time of sale  §I acknowledge that I am investing in a high-risk, speculative business venture, that I may lose all of my investment, and that I can afford the loss of my investment”;
    12. this exemption may not be used in conjunction with any other exemption under this chapter, except the exemption to institutional investors under AS 45.56.300 and 45.56.340 and for offers and sales to controlling persons of the issuer; sales to controlling persons may not count toward the limitation in (3) of this subsection;
    13. this exemption may not be construed to remove any person from the anti-fraud provisions under  AS 45.56.500 45.56.560 , and the exemption may not be construed to provide relief from any other provision of this chapter other than as expressly stated.
  2. The administrator may by order deny or revoke the exemption specified in this section with respect to a specific security if the administrator finds that the sale of the security would work or tend to work a fraud on the purchasers of the security. An order under this subsection may not operate retroactively. A person may not be considered to have violated an order because of any offer or sale effected after the entry of an order under this subsection if the person sustains the burden of proof that the person did not know and, in the exercise of reasonable care, could not have known of the order.
  3. A person who makes application to the department for an exemption under this section shall be assessed a filing fee as prescribed in regulations for this section.
  4. In this section, “residency” has the meaning given in  AS 01.10.055 .

History. (§ 25 ch 65 SLA 2018)

Revisor's notes. —

Enacted as AS 45.56.220 ; renumbered in 2018, at which time references to other renumbered sections were conformed.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.140. Disqualifier.

Exemption from registration under AS 45.56.110 45.56.160 is not available for a security or transaction if the issuer, or any of its officers, controlling persons, or promoters, is subject to a disqualifier described in the regulations adopted under 15 U.S.C. 78c(a)(39) as of the date of the transaction or offer.

History. (§ 25 ch 65 SLA 2018)

Revisor's notes. —

Enacted as AS 45.56.230 ; renumbered in 2018, at which time references to other renumbered sections were conformed.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.150. Waiver and modification.

For any security or transaction or any type of security or transaction, the administrator may by order, waive, withdraw, or modify any of the requirements or conditions of AS 45.56.110 45.56.160 .

History. (§ 25 ch 65 SLA 2018)

Revisor's notes. —

Enacted as AS 45.56.240; renumbered in 2018, at which time references to other renumbered sections were conformed.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.160. Denial, suspension, revocation, condition, or limitation of exemptions.

  1. Except with respect to a federal covered security or a transaction involving a federal covered security, an order under this chapter may deny, suspend application of, condition, limit, or revoke an exemption created under  AS 45.56.110 (3)(C), (7), or (8), 45.56.120 , or 45.56.130 , or an exemption or waiver created under AS 45.56.150 with respect to a specific security, transaction, or offer. An order under this subsection may be issued only under the procedures in  AS 45.56.230(d) or 45.56.690 and only prospectively.
  2. A person does not violate AS 45.56.100 , 45.56.170 45.56.190 , 45.56.210 , 45.56.230 , 45.56.550 , or 45.56.720 by an offer to sell, offer to purchase, sale, or purchase effected after the entry of an order issued under this section if the person did not know and, in the exercise of reasonable care, could not have known, of the order.

History. (§ 25 ch 65 SLA 2018)

Revisor's notes. —

Enacted as AS 45.56.250; renumbered in 2018, at which time references to other renumbered sections were conformed.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.170. Securities registration by coordination.

  1. A security for which a registration statement has been filed under 15 U.S.C. 77a  — 77aa (Securities Act of 1933) in connection with the same offering may be registered by coordination under this section.
  2. A registration statement and accompanying records under this section must contain or be accompanied by the following records, in addition to the information specified in  AS 45.56.190 , and a consent to service of process complying with  AS 45.56.650 :
    1. a copy of the latest form of prospectus filed under 15 U.S.C. 77a — 77aa (Securities Act of 1933);
    2. if the administrator requires, a copy of the articles of incorporation and bylaws or their substantial equivalents currently in effect; a copy of any other information or any other records filed by the issuer under 15 U.S.C. 77a — 77aa (Securities Act of 1933) requested by the administrator; a copy of any agreement with or among underwriters; a copy of any indenture or other instrument governing the issuance of the security to be registered; and a specimen, copy, or description of the security that is required by a regulation adopted or order issued under this chapter; and
    3. an undertaking to forward each amendment to the federal prospectus, other than an amendment that delays the effective date of the registration statement, promptly after it is filed with the Securities and Exchange Commission.
  3. A registration statement under this section becomes effective simultaneously with or subsequent to the federal registration statement when all the following conditions are satisfied:
    1. a stop order under (d) of this section or  AS 45.56.230 or issued by the Securities and Exchange Commission is not in effect, and a proceeding is not pending against the issuer under  AS 45.56.440 ; and
    2. the registration statement has been on file for at least 20 days or a shorter period provided by a regulation adopted or order issued under this chapter.
  4. The registrant shall promptly notify the administrator in a record of the date when the federal registration statement becomes effective and the content of any price amendment and shall promptly file a record containing the price amendment. If the notice is not timely received, the administrator may issue a stop order, without prior notice or hearing, retroactively denying effectiveness to the registration statement or suspending its effectiveness until compliance with this section. The administrator shall promptly notify the registrant of an order by telephone or electronic means and promptly confirm this notice by a record. If the registrant later complies with the notice requirements of this subsection, the stop order is void as of the date of its issuance.
  5. If the federal registration statement becomes effective before each of the conditions in this section is satisfied or is waived by the administrator, the registration statement is automatically effective under this chapter when all the conditions are satisfied or waived. If the registrant notifies the administrator of the date when the federal registration statement is expected to become effective, the administrator shall promptly notify the registrant by telephone or electronic means and promptly confirm this notice by a record, indicating whether all the conditions are satisfied or waived and whether the administrator intends the institution of a proceeding under  AS 45.56.230 . The notice by the administrator does not preclude the institution of a proceeding under  AS 45.56.230 .

History. (§ 25 ch 65 SLA 2018)

Revisor's notes. —

Enacted as AS 45.56.305; renumbered in 2018, at which time references to other renumbered sections were conformed.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.180. Securities registration by qualification.

  1. A security may be registered by qualification under this section.
  2. A registration statement under this section must contain the information or records specified in  AS 45.56.190 , a consent to service of process complying with  AS 45.56.650 , and the following information or records:
    1. with respect to the issuer and any significant subsidiary, the name, address, and form of organization of the issuer and subsidiary; the state or foreign jurisdiction and date of organization of the issuer and subsidiary; the general character and location of the business of the issuer and subsidiary; a description of the physical properties and equipment of the issuer and subsidiary; and a statement of the general competitive conditions in the industry or business in which the issuer and subsidiary are or will be engaged;
    2. with respect to each director and officer of the issuer and other person having a similar status or performing similar functions, the person’s name, address, and principal occupation for the previous five years; the amount of securities of the issuer held by the person as of the 30th day before the filing of the registration statement; the amount of the securities covered by the registration statement to which the person has indicated an intention to subscribe; and a description of any material interest of the person in any material transaction with the issuer or a significant subsidiary effected within the previous three years or proposed to be effected;
    3. with respect to persons covered by (2) of this subsection, the aggregate sum of the remuneration paid to those persons during the previous 12 months and estimated to be paid during the next 12 months, directly or indirectly, by the issuer and all predecessors, parents, subsidiaries, and affiliates of the issuer;
    4. with respect to a person owning of record or owning beneficially, if known, 10 percent or more of the outstanding shares of any class of equity security of the issuer, the information specified in (2) of this subsection, other than the person’s occupation;
    5. with respect to a promoter, if the issuer was organized within the previous three years, the information or records specified in (2) of this subsection, any amount paid to the promoter within that period or intended to be paid to the promoter, and the consideration for the payment;
    6. with respect to a person on whose behalf any part of the offering is to be made in a nonissuer distribution, the person’s name and address; the amount of securities of the issuer held by the person as of the date of the filing of the registration statement; a description of any material interest of the person in any material transaction with the issuer or any significant subsidiary effected within the previous three years or proposed to be effected; and a statement of the reasons for making the offering;
    7. the capitalization and long-term debt, on both a current and pro forma basis, of the issuer and any significant subsidiary, including a description of each security outstanding or being registered or otherwise offered, and a statement of the amount and kind of consideration, whether in the form of cash, physical assets, services, patents, goodwill, or anything else of value, for which the issuer or any subsidiary has issued its securities within the previous two years or is obligated to issue its securities;
    8. the kind and amount of securities to be offered; the proposed offering price or the method by which the offering price is to be computed; any variation at which a proportion of the offering is to be made to a person or class of persons other than the underwriters, with a specification of the person or class; the basis on which the offering is to be made if otherwise than for cash; the estimated aggregate underwriting and selling discounts or commissions and finders’ fees, including separately cash, securities, contracts, or anything else of value to accrue to the underwriters or finders in connection with the offering or, if the selling discounts or commissions are variable, the basis of determining them and their maximum and minimum amounts; the estimated amounts of other selling expenses, including legal, engineering, and accounting charges; the name and address of each underwriter and each recipient of a finder’s fee; a copy of any underwriting or selling group agreement under which the distribution is to be made, or the proposed form of an underwriting or selling group agreement whose terms have not yet been determined; and a description of the plan of distribution of any securities that are to be offered other than through an underwriter;
    9. the estimated monetary proceeds to be received by the issuer from the offering; the purposes for which the proceeds are to be used by the issuer; the estimated amount to be used for each purpose; the order or priority in which the proceeds will be used for the purposes stated; the amounts of any funds to be raised from other sources to achieve the purposes stated; the sources of the funds; and, if a part of the proceeds is to be used to acquire property, including goodwill, other than in the ordinary course of business, the names and addresses of the vendors, the purchase price, the names of any persons that have received commissions in connection with the acquisition, and the amounts of the commissions and other expenses in connection with the acquisition, including the cost of borrowing money to finance the acquisition;
    10. a description of any stock options or other security options outstanding or to be created in connection with the offering, and the amount of those options held or to be held by each person required to be named in (2), (4), (5), (6), or (8) of this subsection and by any person that holds or will hold 10 percent or more in the aggregate of those options;
    11. the dates of, parties to, and general effect, concisely stated, of each managerial or other material contract made or to be made other than in the ordinary course of business to be performed in whole or in part at or after the filing of the registration statement or that was made within the previous two years, and a copy of each contract;
    12. a description of any pending litigation, action, or proceeding to which the issuer is a party and that materially affects the issuer’s business or assets and any litigation, action, or proceeding known to be contemplated;
    13. a copy of any prospectus, pamphlet, circular, form letter, advertisement, or other sales literature intended as of the effective date of the registration statement to be used in connection with the offering and any solicitation of interest used in compliance with  AS 45.56.120 (17)(B);
    14. a specimen or copy of the security being registered, unless the security is uncertificated; a copy of the issuer’s articles of incorporation and bylaws or their substantial equivalents, in effect; and a copy of any indenture or other instrument covering the security to be registered;
    15. a signed or conformed copy of an opinion of counsel concerning the legality of the security being registered, with an English translation if the opinion is in a language other than English, that states whether the security when sold will be validly issued, fully paid, nonassessable, and, if a debt security, a binding obligation of the issuer;
    16. a signed or conformed copy of a consent of any accountant, engineer, appraiser, or other person whose profession gives authority for a statement made by the person if the person is named as having prepared or certified a report or valuation, other than an official record, that is public, and that is used in connection with the registration statement;
    17. a balance sheet of the issuer as of a date within four months before the filing of the registration statement; a statement of income and a statement of cash flows for each of the three fiscal years preceding the date of the balance sheet and for any period between the close of the immediately previous fiscal year and the date of the balance sheet, or for the period of the issuer’s and any predecessor’s existence if less than three years; and, if any part of the proceeds of the offering is to be applied to the purchase of a business, the financial statements that would be required if that business were the registrant; and
    18. any additional information or records required by a regulation adopted or order issued under this chapter.
  3. A registration statement under this section becomes effective when the administrator orders that the registration is effective.
  4. A regulation adopted or order issued under this chapter may require as a condition of registration under this section that a prospectus containing a specified part of the information or record specified in (b) of this section be sent or given to each person to which an offer is made before or concurrently with the earliest of
    1. the first offer made in a record to the person other than by means of a public advertisement, by or for the account of the issuer or another person on whose behalf the offering is being made or by an underwriter or broker-dealer that is offering part of an unsold allotment or subscription taken by the person as a participant in the distribution;
    2. the confirmation of a sale made by or for the account of the person;
    3. payment under the sale; or
    4. delivery of the security under the sale.

History. (§ 25 ch 65 SLA 2018)

Revisor's notes. —

Enacted as AS 45.56.310 ; renumbered in 2018, at which time references to other renumbered sections were conformed.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.190. Securities registration filings.

  1. A registration statement may be filed by the issuer, a person on whose behalf the offering is to be made, or a broker-dealer registered under this chapter.
  2. A person filing a registration statement shall pay a filing fee established by a regulation adopted under this chapter and consent to service of process as described under  AS 45.56.650 .
  3. A registration statement filed under AS 45.56.170 or 45.56.180 must specify
    1. the amount of securities to be offered in this state;
    2. the states in which a registration statement or similar record in connection with the offering has been or is to be filed; and
    3. any adverse order, judgment, or decree issued in connection with the offering by a state securities regulator, the Securities and Exchange Commission, or a court.
  4. A record filed under this chapter or former AS 45.55 within five years preceding the filing of a registration statement may be incorporated by reference in the registration statement to the extent that the record is currently accurate.
  5. In the case of a nonissuer distribution, information or a record may not be required under (i) of this section or AS 45.56.180 unless it is known to the person filing the registration statement or to the person on whose behalf the distribution is to be made or unless it can be furnished by those persons without unreasonable effort or expense.
  6. A regulation adopted or order issued under this chapter may require as a condition of registration that a security issued within the previous five years or to be issued to a promoter for a consideration substantially less than the public offering price or to a person for a consideration other than cash be deposited in escrow and that the proceeds from the sale of the registered security in this state be impounded until the issuer receives a specified amount from the sale of the security, either in this state or elsewhere. The conditions of any escrow or impoundment required under this subsection may be established by a regulation adopted or order issued under this chapter, but the administrator may not reject a depository institution solely because of its location in another state.
  7. A regulation adopted or order issued under this chapter may require as a condition of registration that a security registered under this chapter be sold only on a specified form of subscription or sale contract and that a signed or conformed copy of each contract be filed under this chapter or preserved for a period specified by the regulation or order, not to exceed five years.
  8. Except while a stop order is in effect under AS 45.56.230 , a registration statement is effective for one year after the effective date of the registration statement or for any longer period designated in an order under this chapter during which the security is being offered or distributed in a nonexempted transaction by or for the account of the issuer or other person on whose behalf the offering is being made or by an underwriter or broker-dealer that is still offering part of an unsold allotment or subscription taken as a participant in the distribution. For the purposes of a nonissuer transaction, all outstanding securities of the same class identified in the registration statement as a security registered under this chapter are considered to be registered while the registration statement is effective. If any securities of the same class are outstanding, a registration statement may not be withdrawn until one year after the effective date of the registration statement.  A registration statement may be withdrawn only with the approval of the administrator.
  9. While a registration statement is effective, a regulation adopted or order issued under this chapter may require the person that filed the registration statement to file reports, not more often than quarterly, to keep the information or other record in the registration statement reasonably current and to disclose the progress of the offering.
  10. A registration statement may be amended after the effective date of the registration statement. The post-effective amendment becomes effective when the administrator so orders. If a post-effective amendment is made to increase the number of securities specified to be offered or sold, the person filing the amendment shall pay a registration fee established by a regulation adopted under this chapter. A post-effective amendment relates back to the date of the offering of the additional securities being registered if, within one year after the date of the sale, the amendment is filed and the additional registration fee is paid.

History. (§ 25 ch 65 SLA 2018)

Revisor's notes. —

Enacted as AS 45.56.320 ; renumbered in 2018, at which time references to other renumbered sections were conformed.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.200. Notice filing of federal covered securities.

  1. With respect to a federal covered security, as defined in 15 U.S.C. 77r(b) (Securities Act of 1933), that is not otherwise exempt under AS 45.56.110 45.56.160 , a regulation adopted or order issued under this chapter may require the filing of any or all of the following records:
    1. before the initial offer of a federal covered security in this state, all records that are part of a federal registration statement filed with the Securities and Exchange Commission under 15 U.S.C. 77a — 77aa (Securities Act of 1933), a consent to service of process complying with  AS 45.56.650 signed by the issuer, and the payment of a fee established in a regulation adopted under this chapter;
    2. after the initial offer of the federal covered security in this state, all records that are part of an amendment to a federal registration statement filed with the Securities and Exchange Commission under 15 U.S.C. 77a — 77aa (Securities Act of 1933); and
    3. to the extent necessary or appropriate to compute fees, a report of the value of the federal covered securities sold or offered to persons present in this state if the sales data are not included in records filed with the Securities and Exchange Commission and payment of a fee established in a regulation adopted under this chapter.
  2. A notice filing under (a) of this section is effective for one year commencing on the later of the notice filing or the effectiveness of the offering filed with the Securities and Exchange Commission. On or before expiration, the issuer may renew a notice filing by filing with the Securities and Exchange Commission a copy of those records filed by the issuer that are required by a regulation adopted or order issued under this chapter to be filed and by paying a renewal fee established in a regulation adopted under this chapter. A previously filed consent to service of process complying with  AS 45.56.650 may be incorporated by reference in a renewal. A renewed notice filing becomes effective upon the expiration of the filing being renewed.
  3. With respect to a security that is a federal covered security under 15 U.S.C. 77r(b)(4)(D) (Securities Act of 1933), a regulation adopted under this chapter may require a notice filing by or on behalf of an issuer to include a copy of Form D, including the Appendix, as adopted by the Securities and Exchange Commission, and a consent to service of process complying with  AS 45.56.650 signed by the issuer not later than 15 days after the first sale of the federal covered security in this state and the payment of a fee established in a regulation adopted under this chapter; and the payment of a fee established in a regulation adopted under this chapter for any late filing.
  4. Except with respect to a federal covered security under 15 U.S.C. 77r(b)(1) (Securities Act of 1933), if the administrator finds that there is a failure to comply with a notice or fee requirement of this section, the administrator may issue a stop order suspending the offer and sale of a federal covered security in this state. If the deficiency is corrected, the stop order is void as of the time of its issuance and a penalty may not be imposed by the administrator.

History. (§ 25 ch 65 SLA 2018)

Revisor's notes. —

Enacted as AS 45.56.330 ; renumbered in 2018, at which time references to other renumbered sections were conformed.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.210. Viatical settlement interests.

  1. Before the sale of a viatical settlement interest, an issuer shall provide a prospective buyer with information that is sufficient to make an informed investment decision. The issuer shall also provide the information to the administrator upon request if the issuer is not otherwise required to file the information with the administrator. In this subsection, “information that is sufficient to make an informed investment decision” includes state-mandated disclosure forms and a disclosure of any significant factors that may affect the outcome of the investment.
  2. Except as may be required in the course of conduct of the responsibilities of the administrator, an issuer of a viatical settlement interest may not disclose to another person the identity of the viator or insured of the insurance policy that is the subject of the viatical settlement interest. The viator may waive this prohibition against disclosure if the waiver is in writing and signed by the viator.
  3. The administrator shall regulate transactions between a viatical settlement provider or person acting as an agent of a viatical settlement provider and a subsequent investor, while the authority of the director of the division of insurance extends to the regulation of viatical settlement contracts under  AS 21.96.110 .
  4. In this section,
    1. “viatical settlement contract” has the meaning given in  AS 21.96.110(h) ;
    2. “viatical settlement interest”
      1. means the entire interest or any fractional interest in a life insurance policy or in the death benefit under a life insurance policy that is the subject of a viatical settlement contract;
      2. does not include the initial purchase from the viator by a viatical settlement provider;
    3. “viatical settlement provider” has the meaning given in  AS 21.96.110(h) ;
    4. “viator”  has the meaning given in  AS 21.96.110(h).

History. (§ 25 ch 65 SLA 2018)

Revisor's notes. —

Enacted as AS 45.56.340 ; renumbered in 2018.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.220. Waiver and modification.

The administrator may waive or modify, in whole or in part, any or all of the requirements of AS 45.56.170 and 45.56.190 or the requirement of any information or record in a registration statement or in a periodic report filed under AS 45.56.190 (i).

History. (§ 25 ch 65 SLA 2018)

Revisor's notes. —

Enacted as AS 45.56.350 ; renumbered in 2018, at which time references to other renumbered sections were conformed.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.230. Denial, suspension, and revocation of securities registration.

  1. The administrator may issue a stop order denying effectiveness to, or suspending or revoking the effectiveness of, a registration statement if the administrator finds that the order is in the public interest and that
    1. the registration statement as of the effective date of the registration statement or before the effective date in the case of an order denying effectiveness, an amendment under AS 45.56.190(j) as of the effective date of the amendment, or a report under AS 45.56.190(i) is incomplete in a material respect or contains a statement that, in the light of the circumstances under which it was made, was false or misleading with respect to a material fact;
    2. this chapter or a regulation adopted, order issued, or condition imposed under this chapter has been wilfully violated in connection with the offering by
      1. the person filing the registration statement;
      2. the issuer, a partner, officer, or director of the issuer or a person having a similar status or performing a similar function;
      3. a promoter of the issuer;
      4. a person directly or indirectly controlling or controlled by the issuer, but only if the person filing the registration statement is directly or indirectly controlled by or acting for the issuer; or
      5. an underwriter;
    3. the security registered or sought to be registered is the subject of a permanent or temporary injunction of a court of competent jurisdiction or an administrative stop order or similar order issued under any federal, foreign, or state law other than this chapter applicable to the offering; the administrator may not institute a proceeding against an effective registration statement under this paragraph more than one year after the date of the order or injunction on which it is based, and the administrator may not issue an order under this paragraph based on an order or injunction issued under the securities act of another state unless the order or injunction was based on conduct that would constitute, as of the date of the order, a ground for a stop order under this section;
    4. the issuer’s enterprise or method of business includes or would include activities that are unlawful where performed;
    5. with respect to a security sought to be registered under AS 45.56.170 , there has been a failure to comply with the undertaking required by AS 45.56.170 (b)(3);
    6. the applicant or registrant has not paid the filing fee; the administrator shall void the order if the deficiency is corrected and the order was based solely on the nonpayment of the filing fee; or
    7. the offering
      1. will work or tend to work a fraud on purchasers or would operate to work or tend to work a fraud on purchasers;
      2. has been or would be made with unreasonable amounts of underwriters’ and sellers’ discounts, commissions, or other compensation, or promoters’ profits or participations, or unreasonable amounts or kinds of options; or
      3. is being made on terms that are unfair, unjust, or inequitable.
  2. To the extent practicable, the administrator shall, by a regulation adopted or order issued under this chapter, publish standards that provide notice of conduct that violates (a)(7) of this section.
  3. The administrator may not institute a stop order proceeding against an effective registration statement based on conduct or a transaction known to the administrator when the registration statement became effective unless the proceeding is instituted within 30 days after the registration statement became effective.
  4. The administrator may summarily revoke, deny, postpone, or suspend the effectiveness of a registration statement pending final determination of an administrative proceeding. Upon the issuance of the order, the administrator shall promptly notify each person specified in (e) of this section that the order has been issued, the reasons for the revocation, denial, postponement, or suspension, and that, within 15 days after the receipt of a request in a record from the person, the matter will be scheduled for a hearing. If, within 30 days after the date of service of the order, a hearing is not requested and none is ordered by the administrator, the order becomes final. If a hearing is requested or ordered, the administrator, after notice of and opportunity for hearing for each person subject to the order, may modify or vacate the order or extend the order until final determination.
  5. A stop order may not be issued under this section without
    1. appropriate notice to the applicant or registrant, the issuer, and the person on whose behalf the securities are to be or have been offered;
    2. an opportunity for hearing conducted in the manner provided in  AS 45.56.690(c) ; and
    3. findings of fact and conclusions of law in a record.
  6. The administrator may modify or vacate a stop order issued under this section if the administrator finds that the conditions that caused its issuance have changed or that it is necessary or appropriate in the public interest or for the protection of investors.

History. (§ 25 ch 65 SLA 2018)

Revisor's notes. —

Enacted as AS 45.56.360 ; renumbered in 2018, at which time references to other renumbered sections were conformed.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Article 2. Broker-Dealers, Agents, Investment Advisers, Investment Adviser Representatives, and Federal Covered Investment Advisers.

History. (§ 25 ch 65 SLA 2018)

Sec. 45.56.300. Broker-dealer registration requirement and exemptions.

  1. A person may not transact business in this state as a broker-dealer unless the person is registered under this chapter as a broker-dealer or is exempt from registration as a broker-dealer under (b) of this section.
  2. The following persons are exempt from the registration requirement of (a) of this section:
    1. a broker-dealer without a place of business in this state if the broker-dealer’s only transactions effected in this state are with
      1. the issuer of the securities involved in the transactions;
      2. a broker-dealer registered as a broker-dealer under this chapter or not required to be registered as a broker-dealer under this chapter;
      3. an institutional investor;
      4. a nonaffiliated federal covered investment adviser with investments under management in excess of $100,000,000 acting for the account of others under discretionary authority in a signed record;
      5. a bona fide preexisting customer whose principal place of residence is not in this state if the person is registered as a broker-dealer under 15 U.S.C. 78a — 78pp (Securities Exchange Act of 1934) or not required to be registered under 15 U.S.C. 78a — 78pp (Securities Exchange Act of 1934) and is registered under the securities act of the state in which the customer maintains a principal place of residence;
      6. a bona fide preexisting customer whose principal place of residence is in this state but who was not present in this state when the customer relationship was established if
        1. the broker-dealer is registered under 15 U.S.C. 78a — 78pp (Securities Exchange Act of 1934) or not required to be registered under 15 U.S.C. 78a — 78pp (Securities Exchange Act of 1934) and is registered under the securities act of the state in which the customer relationship was established and where the customer had maintained a principal place of residence; and
        2. within 45 days after the customer’s first transaction in this state, the person files an application for registration as a broker-dealer in this state and a further transaction is not effected more than 75 days after the date on which the application is filed, or, if earlier, the date on which the administrator notifies the person that the administrator has denied the application for registration or has stayed the pendency of the application for good cause;
      7. not more than three customers in this state during the previous 12 months, in addition to those customers specified in (A) — (F) of this paragraph and under (H) of this paragraph if the broker-dealer is registered under 15 U.S.C. 78a — 78pp (Securities Exchange Act of 1934) or not required to be registered under 15 U.S.C. 78a — 78pp (Securities Exchange Act of 1934) and is registered under the securities act of the state in which the broker-dealer has its principal place of business; and
      8. any other person exempted by a regulation adopted or order issued under this chapter; and
    2. a person that deals solely in United States government securities and is supervised as a dealer in government securities by the Board of Governors of the Federal Reserve System, the United States Comptroller of the Currency, or the Federal Deposit Insurance Corporation.
  3. A broker-dealer or an issuer engaged in offering, offering to purchase, purchasing, or selling securities in this state may not, directly or indirectly, employ or associate with an individual to engage in an activity related to securities transactions in this state if the registration of the individual is suspended or revoked or the individual is barred from employment or association with a broker-dealer, an issuer, an investment adviser, or a federal covered investment adviser by an order of the administrator under this chapter, the Securities and Exchange Commission, or a self-regulatory organization. A broker-dealer or issuer does not violate this subsection if the broker-dealer or issuer did not know and, in the exercise of reasonable care, could not have known of the suspension, revocation, or bar. Upon request from a broker-dealer or issuer and for good cause, an order under this chapter may modify or waive, in whole or in part, the application of the prohibitions of this subsection to the broker-dealer.

History. (§ 25 ch 65 SLA 2018)

Revisor's notes. —

Enacted as AS 45.56.405; renumbered in 2018.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.310. Limited registration of Canadian broker-dealers and agents.

  1. If a broker-dealer is registered under this section and its principal office is located in a province or territory of Canada that provides at least equivalent registration for a broker-dealer that is resident in the United States, a broker-dealer that is resident in Canada and does not have an office or other physical presence in this state may effect transactions in securities with or for or induce or attempt to induce the purchase or sale of a security by a person from Canada who is
    1. temporarily resident in this state and with whom the Canadian broker-dealer had a bona fide broker-dealer-client relationship before the person entered the United States; or
    2. resident in this state and whose transactions are in a self-directed tax-advantaged retirement plan in Canada if the person is the holder of or contributor to the plan.
  2. An agent who represents a Canadian broker-dealer registered under this section may, if the agent is registered under this section, effect transactions in securities in this state as permitted for the broker-dealer under (a) of this section.
  3. Subject to the requirements of (a) of this section, a Canadian broker-dealer may register under this section if the broker-dealer
    1. files an application in the form required by the jurisdiction in which the broker-dealer has its principal office;
    2. files a written consent to service of process under AS 45.56.650 ;
    3. is registered as a broker or dealer in good standing in the jurisdiction from which the broker-dealer is effecting transactions into this state and files evidence of the registration; and
    4. is a member of a self-regulating organization or stock exchange in Canada.
  4. An agent may register under this section to effect transactions in securities in this state if the agent represents a Canadian broker-dealer that is registered under this section, and the agent
    1. files an application in the form required by the jurisdiction in which the broker-dealer has its principal office;
    2. files a written consent to service of process under AS 45.56.650 ; and
    3. is registered and files evidence of good standing in the jurisdiction from which the agent is effecting transactions into this state.
  5. Registration under this section becomes effective on the 30th day after an application is filed unless it is made effective earlier by the administrator or a denial order is in effect and a proceeding is pending under AS 45.56.440 .
  6. A Canadian broker-dealer registered under this section shall
    1. maintain provincial or territorial registration and membership in good standing in a self-regulating organization or stock exchange;
    2. provide the administrator on request with books and records relating to its business in this state as a broker-dealer;
    3. inform the administrator promptly of any criminal action taken against the broker-dealer or of any finding or sanction imposed on the broker-dealer as a result of regulatory action, including that of a self-regulating organization, involving fraud, theft, deceit, misrepresentation, or similar conduct; and
    4. disclose to its clients in this state that the broker-dealer and its agents are not subject to the full regulatory requirements of this chapter.
  7. An agent of a Canadian broker-dealer registered under this section shall
    1. maintain provincial or territorial registration in good standing; and
    2. inform the administrator promptly of any criminal action taken against the agent or of any finding or sanction imposed on the broker-dealer or agent as a result of regulatory action, including that of a self-regulating organization, involving fraud, theft, deceit, misrepresentation, or similar conduct.
  8. A Canadian broker-dealer or agent registered under this section may renew its registration by filing by midnight on December 31 of each year the most recent renewal application, if any, filed in the jurisdiction in which the broker-dealer or agent has its principal office or, if a renewal application is not required, the most recent application filed under (c)(1) or (d)(1) of this section.
  9. An applicant for registration or renewal registration under this section shall pay the fee for broker-dealers and agents required by this chapter.
  10. A Canadian broker-dealer or agent registered under this section may not effect transactions in this state except
    1. as permitted under (a) or (b) of this section;
    2. with or through
      1. the issuers of the securities involved in the transactions;
      2. other broker-dealers; or
      3. banks, savings institutions, trust companies, insurance companies, investment companies as defined in 15 U.S.C. 80a-3 (Investment Company Act of 1940), pension or profit-sharing trusts, or other financial institutions or institutional buyers, whether acting for themselves or as trustees; or
    3. as otherwise permitted by this chapter.
  11. A Canadian broker-dealer or agent registered under this section and acting in accordance with the limitations in (j) of this section is exempt from all of the requirements of this chapter except the anti-fraud provisions under AS 45.56.500 and the requirements of this section. The registration of a Canadian broker-dealer or agent under this section may not be denied, suspended, or revoked except in accordance with the provisions of AS 45.56.440 for a breach of the anti-fraud provisions under AS 45.56.500 or the requirements of this section.
  12. In this section, “Canadian broker-dealer” means a broker-dealer that has its principal office in a province or territory of Canada.

History. (§ 25 ch 65 SLA 2018)

Revisor's notes. —

Enacted as AS 45.56.410 ; renumbered in 2018, at which time references to other renumbered sections were conformed.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.320. Registration exemption for merger and acquisition broker.

  1. Except as provided in (b) and (c) of this section, a merger and acquisition broker is exempt from registration under AS 45.56.300 .
  2. A merger and acquisition broker is not exempt from registration under AS 45.56.300 if the broker
    1. directly or indirectly, in connection with the transfer of ownership of an eligible privately held company, receives, holds, transmits, or has custody of the funds or securities to be exchanged by the parties to the transaction;
    2. engages on behalf of an issuer in a public offering of any class of securities that is registered, or is required to be registered, with the Securities and Exchange Commission under 15 U.S.C. 78l(b) (Securities Exchange Act of 1934) or with respect to which the issuer files, or is required to file, periodic information, documents, and reports under 15 U.S.C. 78o(d) (Securities Exchange Act of 1934); or
    3. engages on behalf of any party in a transaction involving a public shell company.
  3. A merger and acquisition broker is not exempt from registration under AS 45.56.300 if the broker is subject to
    1. suspension or revocation of registration under 15 U.S.C. 78o(b)(4) (Securities Exchange Act of 1934);
    2. a statutory disqualification described in 15 U.S.C. 78c(a)(39) (Securities Exchange Act of 1934);
    3. a disqualification established by the rules adopted by the Securities and Exchange Commission under Public Law 112-106, sec. 302(d), for 15 U.S.C. 77d (Dodd-Frank Wall Street Reform and Consumer Protection Act); or
    4. a final order described in 15 U.S.C. 78o(b)(4)(H) (Securities Exchange Act of 1934).
  4. This section may not be construed to limit any other authority of the department to exempt any person, or any class of persons, from a provision of this chapter, or a provision of a rule or regulation adopted under this chapter.
  5. In this section,
    1. “control” means the power, directly or indirectly, to direct the management or policies of a company, whether through ownership of securities, by contract, or otherwise; there is a presumption of control for any person who
      1. is a director, general partner, limited liability company member, limited liability company manager, an officer who exercises executive responsibility, or an officer who has status or functions similar to an officer who exercises executive responsibility;
      2. has the right to vote 20 percent or more of a class of voting securities or the power to sell or direct the sale of 20 percent or more of a class of voting securities; or
      3. in the case of a partnership or limited liability company, has the right to receive upon dissolution, or has contributed, 20 percent or more of the capital;
    2. “eligible privately held company” means a company that
      1. does not have any class of securities registered, or required to be registered, with the Securities and Exchange Commission under 15 U.S.C. 78l(b) (Securities Exchange Act of 1934), or with respect to which the company files, or is required to file, periodic information, documents, and reports under 15 U.S.C. 78o(d) (Securities Exchange Act of 1934); and
      2. in the fiscal year ending immediately before the fiscal year in which the services of the merger and acquisition broker are initially engaged with respect to the securities transaction, meets either or both of the following conditions, determined in accordance with the historical financial accounting records of the company:
        1. the earnings of the company before interest, taxes, depreciation, and amortization are less than $25,000,000;
        2. the gross revenue of the company is less than $250,000,000;
    3. “merger and acquisition broker” means a broker, and a person associated with the broker, engaged in the business of effecting securities transactions solely in connection with the transfer of ownership of an eligible privately held company, regardless of whether that broker acts on behalf of a seller or buyer, through the purchase, sale, exchange, issuance, repurchase, or redemption of, or a business combination involving, securities or assets of the eligible privately held company, if the broker reasonably believes that
      1. upon consummation of the transaction, a person acquiring securities or assets of the eligible privately held company, acting alone or in concert, will control and, directly or indirectly, be active in the management of the eligible privately held company or the business conducted with the assets of the eligible privately held company; and
      2. if a person is offered securities in exchange for securities or assets of the eligible privately held company, the person will, before becoming legally bound to consummate the transaction, receive or have reasonable access to the most recent fiscal year-end financial statements of the issuer of the securities as customarily prepared by its management in the normal course of operations and, if the financial statements of the issuer are audited, reviewed, or compiled, any related statement by the independent accountant; a balance sheet dated not more than 120 days before the date of the exchange offer; and information pertaining to the management, business, results of operations for the period covered by the foregoing financial statements, and any material loss contingencies of the issuer;
    4. “public shell company” means a company that, at the time of a transaction with an eligible privately held company,
      1. has any class of securities registered, or required to be registered, with the Securities and Exchange Commission under 15 U.S.C. 78l(b), or with respect to which the company files, or is required to file, periodic information, documents, and reports under 15 U.S.C. 78o(d);
      2. has no assets or has nominal operations; and
      3. has
        1. no assets or has nominal assets;
        2. assets consisting solely of cash and cash equivalents; or
        3. assets consisting of any amount of cash and cash equivalents and nominal other assets.

History. (§ 25 ch 65 SLA 2018)

Revisor's notes. —

Enacted as AS 45.56.420 ; renumbered in 2018, at which time references to other renumbered sections were conformed.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.330. Agent registration requirement and exemptions.

  1. An individual may not transact business in this state as an agent unless the individual is registered under this chapter as an agent or is exempt from registration as an agent under (b) of this section.
  2. The following individuals are exempt from the registration requirement of (a) of this section:
    1. an individual who represents a broker-dealer in effecting transactions in this state limited to those described in 15 U.S.C. 78o(i);
    2. an individual who represents a broker-dealer that is exempt under AS 45.56.300(b) or 45.56.310 ;
    3. an individual who represents an issuer with respect to an offer or sale of the issuer’s own securities or those of the issuer’s parent or any of the issuer’s subsidiaries and who is not compensated in connection with the individual’s participation by the payment of commissions or other remuneration based, directly or indirectly, on transactions in those securities;
    4. an individual who represents an issuer and who effects transactions in the issuer’s securities exempted by AS 45.56.120 , other than AS 45.56.120 (11) and (14);
    5. an individual who represents an issuer that effects transactions solely in federal covered securities of the issuer, but an individual who effects transactions in a federal covered security under 15 U.S.C. 77r(b)(3) or (b)(4)(D) (Securities Act of 1933) is not exempt if the individual is compensated in connection with the agent’s participation by the payment of commissions or other remuneration based, directly or indirectly, on transactions in those securities;
    6. an individual who represents a broker-dealer registered in this state under AS 45.56.300(a) or exempt from registration under AS 45.56.300(b) in the offer and sale of securities for an account of a nonaffiliated federal covered investment adviser with investments under management in excess of $100,000,000 acting for the account of others under discretionary authority in a signed record;
    7. an individual who represents an issuer in connection with the purchase of the issuer’s own securities;
    8. an individual who represents an issuer and who restricts participation to performing clerical or ministerial acts; or
    9. any other individual exempted by a regulation adopted or order issued under this chapter.
  3. The registration of an agent is effective only while the agent is employed by or associated with a broker-dealer registered under this chapter or an issuer that is offering, selling, or purchasing the issuer’s securities in this state.
  4. A broker-dealer or an issuer engaged in offering, selling, or purchasing securities in this state may not employ or associate with an agent who transacts business in this state on behalf of broker-dealers or issuers unless the agent is registered under (a) of this section or exempt from registration under (b) of this section.
  5. An individual may not act as an agent for more than one broker-dealer or one issuer at a time, unless the broker-dealer or the issuer for which the agent acts is affiliated by direct or indirect common control or is authorized by a regulation or order issued under this chapter.

History. (§ 25 ch 65 SLA 2018)

Revisor's notes. —

Enacted as AS 45.56.430 ; renumbered in 2018, at which time references to other renumbered sections were conformed.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.340. Investment adviser registration requirement and exemptions.

  1. A person may not transact business in this state as an investment adviser unless the person is registered under this chapter as an investment adviser or is exempt from registration as an investment adviser under (b) of this section.
  2. The following persons are exempt from the registration requirement in (a) of this section:
    1. a person without a place of business in this state that is registered under the securities act of the state in which the person has the person’s principal place of business if the person’s only clients in this state are
      1. federal covered investment advisers, investment advisers registered under this chapter, or broker-dealers registered under this chapter;
      2. institutional investors;
      3. bona fide preexisting clients whose principal places of residence are not in this state if the investment adviser is registered under the securities act of the state in which the clients maintain principal places of residence; or
      4. exempted by a regulation adopted or order issued under this chapter;
    2. a person without a place of business in this state if the person has had, during the preceding 12 months, not more than five clients that are resident in this state in addition to those specified under (1) of this subsection; or
    3. any other person exempted by a regulation adopted or order issued under this chapter.
  3. An investment adviser may not, directly or indirectly, employ or associate with an individual to engage in an activity related to investment advice in this state if the registration of the individual is suspended or revoked or the individual is barred from employment or association with an investment adviser, federal covered investment adviser, or broker-dealer by an order under this chapter, the Securities and Exchange Commission, or a self-regulatory organization, unless the investment adviser did not know and, in the exercise of reasonable care, could not have known of the suspension, revocation, or bar. Upon request from the investment adviser and for good cause, the administrator may by order, waive, in whole or in part, the application of the prohibitions of this subsection to the investment adviser.
  4. An investment adviser may not employ or associate with an individual required to be registered under this chapter as an investment adviser representative who transacts business in this state on behalf of the investment adviser unless the individual is registered under AS 45.56.350(a) or is exempt from registration under AS 45.56.350(b) .

History. (§ 25 ch 65 SLA 2018)

Revisor's notes. —

Enacted as AS 45.56.435; renumbered in 2018, at which time references to other renumbered sections were conformed.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.350. Investment adviser representative registration requirement and exemptions.

  1. An individual may not transact business in this state as an investment adviser representative unless the individual is registered under this chapter as an investment adviser representative or is exempt from registration as an investment adviser representative under (b) of this section.
  2. The following individuals are exempt from the registration requirement of (a) of this section:
    1. an individual who is employed by or associated with an investment adviser that is exempt from registration under AS 45.56.340(b) or a federal covered investment adviser that is excluded from the notice filing requirements of AS 45.56.360 ; and
    2. any other individual exempted by a regulation adopted or order issued under this chapter.
  3. The registration of an investment adviser representative is not effective while the investment adviser representative is not employed by or associated with an investment adviser registered under this chapter or a federal covered investment adviser that has made or is required to make a notice filing under AS 45.56.360 .
  4. An individual may transact business as an investment adviser representative for more than one investment adviser or federal covered investment adviser unless a regulation adopted or order issued under this chapter prohibits or limits an individual from acting as an investment adviser representative for more than one investment adviser or federal covered investment adviser.
  5. An individual acting as an investment adviser representative may not, directly or indirectly, conduct business in this state on behalf of an investment adviser or a federal covered investment adviser if the registration of the individual as an investment adviser representative is suspended or revoked or the individual is barred from employment or association with an investment adviser or a federal covered investment adviser by an order under this chapter, the Securities and Exchange Commission, or a self-regulatory organization. Upon request from a federal covered investment adviser and for good cause, the administrator may by order, waive, in whole or in part, the application of the requirements of this subsection to the federal covered investment adviser.
  6. An investment adviser registered under this chapter, a federal covered investment adviser that has filed a notice under AS 45.56.360 , or a broker-dealer registered under this chapter is not required to employ or associate with an individual as an investment adviser representative if the only compensation paid to the individual for a referral of investment advisory clients is paid to an investment adviser registered under this chapter, a federal covered investment adviser who has filed a notice under AS 45.56.360 , or a broker-dealer registered under this chapter with which the individual is employed or associated as an investment adviser representative.

History. (§ 25 ch 65 SLA 2018)

Revisor's notes. —

Enacted as AS 45.56.440 ; renumbered in 2018, at which time references to other renumbered sections were conformed.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.360. Federal covered investment adviser notice filing requirement.

  1. Except with respect to a federal covered investment adviser described in (b) of this section, a federal covered investment adviser may not transact business in this state as a federal covered investment adviser unless the federal covered investment adviser complies with (c) of this section.
  2. The following federal covered investment advisers are not required to comply with (c) of this section:
    1. a federal covered investment adviser without a place of business in this state if the only clients of the federal covered investment adviser in this state are
      1. federal covered investment advisers, investment advisers registered under this chapter, and broker-dealers registered under this chapter;
      2. institutional investors;
      3. bona fide preexisting clients whose principal places of residence are not in this state; or
      4. other clients specified by a regulation adopted or order issued under this chapter;
    2. a federal covered investment adviser without a place of business in this state if the person has had, during the preceding 12 months, not more than five clients that are resident in this state in addition to those specified under (1) of this subsection; and
    3. any other person excluded by a regulation adopted or order issued under this chapter.
  3. A person acting as a federal covered investment adviser not excluded under (b) of this section shall file a notice, a consent to service of process complying with AS 45.56.650 , and the records that have been filed with the Securities and Exchange Commission under 15 U.S.C. 80b-1 — 80b-21 (Investment Advisers Act of 1940) as required by a regulation adopted or order issued under this chapter and shall pay the fees specified in AS 45.56.410 .
  4. The notice under (c) of this section becomes effective upon filing.

History. (§ 25 ch 65 SLA 2018)

Revisor's notes. —

Enacted as AS 45.56.445; renumbered in 2018, at which time references to other renumbered sections were conformed.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.370. Registration by broker-dealer, agent, investment adviser, and investment adviser representative.

  1. A person shall register as a broker-dealer, agent, investment adviser, or investment adviser representative by filing an application and a consent to service of process complying with AS 45.56.650 and by paying the fee specified in AS 45.56.410 and any reasonable fees charged by the designee of the administrator for processing the filing. The application must contain
    1. the information or record required for the filing of a uniform application; and
    2. upon request by the administrator, any other financial or other information or record that the administrator determines is appropriate.
  2. If the information or record contained in an application filed under (a) of this section is or becomes inaccurate or incomplete in a material respect, the registrant shall promptly file a correcting amendment.
  3. If an order is not in effect, and a proceeding is not pending under AS 45.56.440 , and the administrator has not initiated an investigation, registration becomes effective at noon on the 45th day after a completed application is filed, unless the registration is denied. A regulation adopted or order issued under this chapter may set an earlier effective date or may defer the effective date until noon on the 45th day after the filing of any amendment completing the application.
  4. A registration is effective until midnight on December 31 of the year for which the application for registration is filed. Unless an order is in effect under AS 45.56.440 , a registration may be automatically renewed each year by filing the records required by a regulation adopted or order issued under this chapter, by paying the fee specified in AS 45.56.410 , and by paying costs charged by the designee of the administrator for processing the filings.
  5. A regulation adopted or order issued under this chapter may impose other conditions, not inconsistent with 15 U.S.C. 77b, 77c, 77e, 77f, 77r, 77z-3, 77ddd, 78b — 78d, 78g, 78h, 78n, 78o, 78q, 78bb, 78ee, 78kk, 78mm, 80a-2, 80a-3, 80a-6, 80a-12, 80a-24, 80a-26, 80a-27, 80a-29, 80a-30, 80a-34, 80a-51, 80a-54, 80a-60, 80a-63, 80b-2, 80b-3a, 80b-5, 80b-10, 80b-18a, and 80b-20, and 29 U.S.C. 1002 (National Securities Markets Improvement Act of 1996). An order issued under this chapter may waive, in whole or in part, specific requirements in connection with registration that are in the public interest and for the protection of investors.

History. (§ 25 ch 65 SLA 2018)

Revisor's notes. —

Enacted as AS 45.56.450; renumbered in 2018, at which time references to other renumbered sections were conformed.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.380. Succession and change in registration of broker-dealer or investment adviser.

  1. A broker-dealer or investment adviser may succeed to the current registration of another broker-dealer or investment adviser or a notice filing of a federal covered investment adviser, and a federal covered investment adviser may succeed to the current registration of an investment adviser or notice filing of another federal covered investment adviser, by filing as a successor an application for registration under AS 45.56.300 or 45.56.340 or a notice under AS 45.56.360 for the unexpired portion of the current registration or notice filing.
  2. A broker-dealer or investment adviser that changes its form of organization or state of incorporation or organization may continue its registration by filing an amendment to its registration if the change does not involve a material change in its financial condition or management. The amendment becomes effective when filed or on a date designated by the registrant in its filing. The new organization is a successor to the original registrant for the purposes of this chapter. If there is a material change in financial condition or management, the broker-dealer or investment adviser shall file a new application for registration. A predecessor registered under this chapter shall stop conducting its securities business other than winding down transactions and shall file for withdrawal of broker-dealer or investment adviser registration within 45 days after filing its amendment to effect succession.
  3. A broker-dealer or investment adviser that changes its name may continue its registration by filing an amendment to its registration. The amendment becomes effective when filed or on a date designated by the registrant.
  4. A change of control of a broker-dealer or investment adviser may be made in accordance with a regulation adopted or order issued under this chapter.

History. (§ 25 ch 65 SLA 2018)

Revisor's notes. —

Enacted as AS 45.56.455; renumbered in 2018, at which time references to other renumbered sections were conformed.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.390. Termination of employment or association of agent and investment adviser representative and transfer of employment or association.

  1. If an agent registered under this chapter terminates employment by or association with a broker-dealer or issuer, or if an investment adviser representative registered under this chapter terminates employment by or association with an investment adviser or federal covered investment adviser, or if either registrant terminates activities that require registration as an agent or investment adviser representative, the broker-dealer, issuer, investment adviser, or federal covered investment adviser shall promptly file a notice of termination. The registrant may file the notice of termination if the registrant learns that the broker-dealer, issuer, investment adviser, or federal covered investment adviser has not filed the notice.
  2. If an agent registered under this chapter terminates employment by or association with a broker-dealer registered under this chapter and begins employment by or association with another broker-dealer registered under this chapter, or if an investment adviser representative registered under this chapter terminates employment by or association with an investment adviser registered under this chapter or a federal covered investment adviser that has filed a notice under AS 45.56.360 and begins employment by or association with another investment adviser registered under this chapter or a federal covered investment adviser that has filed a notice under AS 45.56.360 , then, within 30 days after the termination, upon the filing by or on behalf of the registrant of an application for registration that complies with the requirement of AS 45.56.370(a) and payment of the filing fee required under AS 45.56.410 , the registration of the agent or investment adviser representative is
    1. immediately effective as of the date of the completed filing, if the agent’s record or successor record in the Central Registration Depository operated by the Financial Industry Regulatory Authority or the investment adviser representative’s record or successor record in the Investment Adviser Registration Depository operated by the Financial Industry Regulatory Authority does not contain a new or amended disciplinary disclosure within the previous 12 months; or
    2. temporarily effective as of the date of the completed filing, if the agent’s record or successor record in the Central Registration Depository operated by the Financial Industry Regulatory Authority or the investment adviser representative’s record or successor record in the Investment Adviser Registration Depository operated by the Financial Industry Regulatory Authority contains a new or amended disciplinary disclosure within the preceding 12 months.
  3. The administrator may withdraw a temporary registration if there are or were grounds for discipline as specified in AS 45.56.440 and the administrator does so within 30 days after the filing of the application. If the administrator does not withdraw the temporary registration within the 30-day period, registration becomes automatically effective on the 31st day after filing.
  4. The administrator may prevent the effectiveness of a transfer of an agent or investment adviser representative under (b)(1) or (2) of this section based on the public interest and the protection of investors.
  5. If the administrator determines that a registrant or applicant for registration is no longer in existence, has ceased to act as a broker-dealer, agent, investment adviser, or investment adviser representative, is the subject of an adjudication of incapacity, is subject to the control of a committee, conservator, or guardian, or cannot reasonably be located, a regulation adopted or order issued under this chapter may require that the registration be cancelled or terminated or the application be denied. The administrator may reinstate a cancelled or terminated registration, with or without hearing, and may make the registration retroactive.

History. (§ 25 ch 65 SLA 2018)

Revisor's notes. —

Enacted as AS 45.56.460; renumbered in 2018, at which time references to other renumbered sections were conformed.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.400. Withdrawal of registration of broker-dealer, agent, investment adviser, and investment adviser representative.

Withdrawal of registration by a broker-dealer, agent, investment adviser, or investment adviser representative becomes effective 60 days after the filing of the application to withdraw or within any shorter period as provided by a regulation adopted or order issued under this chapter unless a revocation or suspension proceeding is pending when the application is filed. If a proceeding is pending, withdrawal becomes effective when and upon the conditions required by a regulation adopted or order issued under this chapter. The administrator may institute a revocation or suspension proceeding under AS 45.56.440 within one year after the withdrawal became effective automatically and issue a revocation or suspension order as of the last date on which registration was effective if a proceeding is not pending.

History. (§ 25 ch 65 SLA 2018)

Revisor's notes. —

Enacted as AS 45.56.465; renumbered in 2018, at which time a reference to another renumbered section was conformed.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.410. Fees.

  1. The administrator shall establish fees by regulation for
    1. an initial filing of an application as a broker-dealer and renewal of an application by a broker-dealer for registration;
    2. an application for registration as an agent and renewal of registration as an agent;
    3. an application for registration as an investment adviser and renewal of registration as an investment adviser;
    4. an application for registration as an investment adviser representative, a renewal of registration as an investment adviser representative, and a change of registration as an investment adviser representative; and
    5. an initial fee and annual notice fee for a federal covered investment adviser required to file a notice under AS 45.56.360 .
  2. A person required to pay a filing or notice fee under this section may transmit the fee through or to a designee as provided by a regulation adopted or order issued under this chapter.
  3. The administrator may establish other fees by regulation as necessary to administer this chapter.

History. (§ 25 ch 65 SLA 2018)

Revisor's notes. —

Enacted as AS 45.56.470; renumbered in 2018, at which time a reference to another renumbered section was conformed.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.420. Post registration requirements.

  1. Subject to 15 U.S.C. 78o(i) or 80b-18a, a regulation adopted or order issued under this chapter may establish minimum financial requirements for broker-dealers registered or required to be registered under this chapter and investment advisers registered or required to be registered under this chapter.
  2. Subject to 15 U.S.C. 78o(i) or 80b-18a, a broker-dealer registered or required to be registered under this chapter and an investment adviser registered or required to be registered under this chapter shall file the financial reports required by a regulation adopted or order issued under this chapter. If the information contained in a record filed under this subsection is or becomes inaccurate or incomplete in a material respect, the registrant shall promptly file a correcting amendment.
  3. Subject to 15 U.S.C. 78o(i) or 80b-18a,
    1. a broker-dealer registered or required to be registered under this chapter and an investment adviser registered or required to be registered under this chapter shall make and maintain the accounts, correspondence, memoranda, papers, books, and other records required by a regulation adopted or order issued under this chapter;
    2. broker-dealer records required to be maintained under (1) of this subsection may be maintained in any form of data storage acceptable under 15 U.S.C. 78q(a) if they are readily accessible to the administrator; and
    3. investment adviser records required to be maintained under (1) of this subsection may be maintained in any form of data storage required by a regulation adopted or order issued under this chapter.
  4. The records of a broker-dealer registered or required to be registered under this chapter and of an investment adviser registered or required to be registered under this chapter are subject to the reasonable periodic, special, or other audits or inspections by a representative of the administrator, in or outside this state, that the administrator considers necessary or appropriate in the public interest and for the protection of investors. An audit or inspection may be made at any time and without prior notice. The administrator may copy and remove for audit or inspection copies of all records the administrator reasonably considers necessary or appropriate to conduct the audit or inspection. The administrator may assess a reasonable charge for conducting an audit or inspection under this subsection.
  5. Subject to 15 U.S.C. 78o(i) or 80b-18a, a regulation adopted or order issued under this chapter may require a broker-dealer or investment adviser that has custody of or discretionary authority over funds or securities of a customer or client to obtain insurance or post a bond or other satisfactory form of security in an amount established by a regulation adopted under this chapter. The administrator may determine the requirements of the insurance, bond, or other satisfactory form of security. Insurance or a bond or other satisfactory form of security may not be required of a broker-dealer registered under this chapter whose net capital exceeds, or of an investment adviser registered under this chapter whose minimum financial requirements exceed, the amounts required by a regulation adopted or order issued under this chapter. The insurance, bond, or other satisfactory form of security must permit an action by a person to enforce any liability on the insurance, bond, or other satisfactory form of security if instituted within the time limitations in AS 45.56.710(j)(2) .
  6. Subject to 15 U.S.C. 78o(i) or 80b-18a, an agent may not have custody of funds or securities of a customer except under the supervision of a broker-dealer, and an investment adviser representative may not have custody of funds or securities of a client except under the supervision of an investment adviser or a federal covered investment adviser. A regulation adopted or order issued under this chapter may prohibit, limit, or impose conditions on a broker-dealer regarding custody of funds or securities of a customer and on an investment adviser regarding custody of securities or funds of a client.
  7. With respect to an investment adviser registered or required to be registered under this chapter, a regulation adopted or order issued under this chapter may require that information or other records be furnished or disseminated to clients or prospective clients in this state as necessary or appropriate in the public interest and for the protection of investors and advisory clients.
  8. A regulation adopted or order issued under this chapter may require an individual registered under AS 45.56.330 or 45.56.350 to participate in a continuing education program approved by the Securities and Exchange Commission and administered by a self-regulatory organization, or, in the absence of a continuing education program, a regulation adopted or order issued under this chapter may require continuing education for an individual registered under AS 45.56.350 .

History. (§ 25 ch 65 SLA 2018)

Revisor's notes. —

Enacted as AS 45.56.475; renumbered in 2018, at which time references to other renumbered sections were conformed.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.430. Protecting older and vulnerable adults from financial exploitation.

  1. If a broker-dealer, investment adviser, or qualified individual reasonably believes that the financial exploitation of a covered adult may have occurred, may have been attempted, or is being attempted, the broker-dealer, investment adviser, or qualified individual shall notify adult protective services and the administrator not later than five days after the broker-dealer, investment adviser, or qualified individual develops the reasonable belief that the financial exploitation or attempted financial exploitation has or may have occurred, or is being attempted, except that the broker-dealer, investment adviser, or qualified individual shall notify adult protective services and the administrator immediately upon confirmation of the financial exploitation or attempted financial exploitation of the covered adult.
  2. The requirements of (a) of this section may not be construed to require more than one notification for each occurrence of exploitation or attempted exploitation.
  3. If a broker-dealer, investment adviser, or qualified individual reasonably believes that financial exploitation of a covered adult may have occurred, may have been attempted, or is being attempted, a broker-dealer, investment adviser, or qualified individual may notify a person whom the covered adult previously designated to be notified about financial matters of the covered adult, as well as any other person allowed under state or federal law or regulation, or the rules of a self-regulatory organization, except that the broker-dealer, investment adviser, or qualified individual may not notify a person that is suspected of engaging in financial exploitation or other abuse of the covered adult.
  4. A broker-dealer or investment adviser may delay a disbursement from an account of a covered adult or from an account on which a covered adult is a beneficiary if
    1. the broker-dealer, investment adviser, or qualified individual reasonably believes, after initiating an internal review of the requested disbursement and the suspected financial exploitation of a covered adult, that the requested disbursement may result in financial exploitation of the covered adult; and
    2. the broker-dealer or investment adviser
      1. within two business days after receiving the request for disbursement, provides written notification of the delay and the reason for the delay to all persons authorized to transact business on the account, except to a person that the broker-dealer, investment adviser, or qualified individual reasonably believes has engaged in suspected or attempted financial exploitation of the covered adult;
      2. within two business days after receiving the request for disbursement, notifies adult protective services and the administrator; and
      3. continues as necessary an internal review of the suspected or attempted financial exploitation of the covered adult and, within seven business days after receiving the request for disbursement, reports the status of the investigation to adult protective services and the administrator, and provides additional status updates to the administrator and adult protective services upon request.
  5. A disbursement delay under (d) of this section expires when the earlier of the following events occurs:
    1. the broker-dealer or investment adviser determines that the disbursement will not result in financial exploitation of the covered adult;
    2. 15 business days after the date on which the broker-dealer or investment adviser first delayed the disbursement, unless
      1. adult protective services or the administrator requests that the broker-dealer or investment adviser extend the delay, in which case the delay expires 25 business days after the date on which the broker-dealer or investment adviser first delayed disbursement; or
      2. adult protective services, the administrator, or the superior court terminates the delay.
  6. Adult protective services, the administrator, the broker-dealer or investment adviser that initiated the delay under (d) or (e) of this section, or another interested person may petition the superior court for an order extending a disbursement delay or providing other relief to a covered adult, and the superior court may enter an order providing the requested relief.
  7. A broker-dealer or investment adviser shall provide access to or copies of records that are relevant to the suspected or attempted financial exploitation of a covered adult to adult protective services and to state law enforcement agencies as part of a referral to adult protective services or an investigation. The records that may be accessed or copied under this subsection include records relating to past transactions that may have involved financial exploitation of the covered adult as well as records relating to the most recent transaction that may involve financial exploitation of the covered adult. Records made available to agencies under this subsection are not public records as defined in AS 40.25.220 . This subsection does not limit or impede the authority of the administrator to access or examine the books and records of broker-dealers and investment advisers as otherwise provided by law.
  8. A broker-dealer, investment adviser, or qualified individual acting in good faith and exercising reasonable care under (a) — (g) of this section is immune from administrative or civil liability for a notification, disclosure, disbursement delay, or record sharing under (a) — (g) of this section.
  9. The following constitute the financial exploitation of a covered adult under this section:
    1. the wrongful or unauthorized taking, withholding, appropriation, or use of the money, assets, or other property of a covered adult; or
    2. an act or omission of a person, including an act or omission made through the use of a power of attorney, guardianship, or conservatorship of a covered adult, to
      1. obtain control, through deception, intimidation, or undue influence, over the covered adult’s money, assets, or other property to deprive the covered adult of the ownership, use, benefit, or possession of the covered adult’s money, assets, or other property; or
      2. convert the ownership, use, benefit, or possession of the covered adult’s money, assets, or other property to another person.
  10. In this section,
    1. “adult protective services” means the agency that has the responsibility for providing protective services for adults; in this paragraph,
      1. “agency” has the meaning given in AS 44.64.200 ;
      2. “protective services” has the meaning given in AS 47.24.900 ;
    2. “covered adult” means a natural person who is
      1. 60 years of age or older; or
      2. a vulnerable adult;
    3. “qualified individual” means an agent, investment adviser representative, or other person who is acting in a supervisory, compliance, or legal capacity for a broker-dealer or investment adviser.

History. (§ 25 ch 65 SLA 2018)

Revisor's notes. —

Enacted as AS 45.56.480; renumbered in 2018.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.440. Denial, revocation, suspension, withdrawal, restriction, condition, or limitation of registration.

  1. If the administrator finds that the order is in the public interest and (d) of this section authorizes the action, an order issued under this chapter may deny an application, or may condition or limit registration of an applicant to be a broker-dealer, agent, investment adviser, or investment adviser representative, and, if the applicant is a broker-dealer or investment adviser, of a partner, officer, director, or person having a similar status or performing similar functions, or a person directly or indirectly in control, of the broker-dealer or investment adviser.
  2. If the administrator finds that the order is in the public interest and (d) of this section authorizes the action, an order issued under this chapter may revoke, suspend, condition, or limit the registration of a registrant, and, if the registrant is a broker-dealer or investment adviser, of a partner, officer, director, or person having a similar status or performing similar functions, or a person directly or indirectly in control, of the broker-dealer or investment adviser. However, the administrator may not
    1. institute a revocation or suspension proceeding under this subsection based on an order issued under a law of another state that is reported to the administrator or a designee of the administrator more than three years after the date of the order on which it is based; or
    2. under (d)(5)(A) and (B) of this section, issue an order based on an order issued under the securities act of another state unless the other order was based on conduct for which (d) of this section would authorize the action had the conduct occurred in this state.
  3. If the administrator finds that the order is in the public interest and (d)(1) — (6), (8) — (10), (12), or (13) of this section authorize the action, an order under this chapter may censure, impose a bar, or impose a civil penalty of not more than $100,000 for a single violation on a registrant and, if the registrant is a broker-dealer or investment adviser, on a partner, officer, director, or person having a similar status or performing similar functions, or on a person directly or indirectly in control of the broker-dealer or investment adviser.
  4. A person may be disciplined under (a) — (c) of this section if the person
    1. has filed, within the previous 10 years under this chapter or former AS 45.55, an application for registration in this state that, as of the effective date of registration or as of any date after filing in the case of an order denying effectiveness, was incomplete in any material respect or contained a statement that, in light of the circumstances under which it was made, was false or misleading with respect to a material fact;
    2. wilfully violated or wilfully failed to comply with this chapter or former AS 45.55 or a regulation adopted or order issued under this chapter or former AS 45.55 within the previous 10 years;
    3. has been convicted of a felony or within the previous 10 years has been convicted of a misdemeanor involving a security, a commodity future or option contract, or an aspect of a business involving securities, commodities, investments, franchises, insurance, banking, or finance;
    4. is enjoined or restrained by a court of competent jurisdiction in an action instituted by the administrator under this chapter or former AS 45.55, by a state, by the Securities and Exchange Commission, or by the United States from engaging in or continuing an act, practice, or course of business involving an aspect of a business involving securities, commodities, investments, franchises, insurance, banking, or finance;
    5. is the subject of an order issued after notice and opportunity for hearing by
      1. the securities or other financial services regulator of a state or the Securities and Exchange Commission or other federal agency denying, revoking, barring, or suspending registration as a broker-dealer, agent, investment adviser, federal covered investment adviser, or investment adviser representative;
      2. the securities regulator of a state or the Securities and Exchange Commission against a broker-dealer, agent, investment adviser, investment adviser representative, or federal covered investment adviser;
      3. the Securities and Exchange Commission or a self-regulatory organization suspending or expelling the registrant from membership in the self-regulatory organization;
      4. a court adjudicating a United States Postal Service fraud order;
      5. the insurance regulator of a state denying, suspending, or revoking registration as an insurance agent; or
      6. a depository institution or financial services regulator suspending or barring the person from the depository institution or other financial services business;
    6. is the subject of an adjudication or determination, after notice and opportunity for hearing, by the Securities and Exchange Commission, the Commodity Futures Trading Commission, the Federal Trade Commission, a federal depository institution regulator, or a depository institution, insurance, or other financial services regulator of a state that the person wilfully violated 15 U.S.C. 77a — 77aa (Securities Act of 1933), 15 U.S.C. 78a — 78pp (Securities Exchange Act of 1934), 15 U.S.C. 80b-1 — 80b-21 (Investment Advisers Act of 1940), 15 U.S.C. 80a-1 — 80a-64 (Investment Company Act of 1940), or 7 U.S.C. 1 — 27 (Commodity Exchange Act), the securities or commodities law of a state, or a federal or state law under which a business involving investments, franchises, insurance, banking, or finance is regulated;
    7. is insolvent, either because the person’s liabilities exceed the person’s assets or because the person cannot meet the person’s obligations as they mature, but the administrator may not enter an order against an applicant or registrant under this paragraph without a finding of insolvency as to the applicant or registrant;
    8. refuses to allow or otherwise impedes the administrator from conducting an audit or inspection under AS 45.56.420(d) or refuses access to a registrant’s office to conduct an audit or inspection under AS 45.56.420(d) ;
    9. has failed to reasonably supervise an agent, investment adviser representative, or other individual, if the agent, investment adviser representative, or other individual was subject to the person’s supervision and committed a violation of this chapter or former AS 45.55 or a regulation adopted or order issued under this chapter or former AS 45.55;
    10. has not paid the proper filing fee within 30 days after having been notified by the administrator of a deficiency, but the administrator shall vacate an order under this paragraph when the deficiency is corrected;
    11. after notice and opportunity for a hearing, has been found
      1. by a court of competent jurisdiction to have wilfully violated the laws of a foreign jurisdiction under which the business of securities, commodities, investment, franchises, insurance, banking, or finance is regulated;
      2. to have been the subject of an order of a securities regulator of a foreign jurisdiction denying, revoking, or suspending the right to engage in the business of securities as a broker-dealer, agent, investment adviser, investment adviser representative, or similar person; or
      3. to have been suspended or expelled from membership by or participation in a securities exchange or securities association operating under the securities laws of a foreign jurisdiction;
    12. is the subject of a cease and desist order issued by the Securities and Exchange Commission or issued under the securities, commodities, investment, franchise, banking, finance, or insurance laws of a state;
    13. has engaged in dishonest or unethical practices in the securities, commodities, investment, franchise, banking, finance, or insurance business;
    14. is not qualified based on factors that may include training, experience, and knowledge of the securities business; however, in the case of an application by an agent for a broker-dealer that is a member of a self-regulatory organization or by an individual for registration as an investment adviser representative, a denial order may not be based on this paragraph if the individual has successfully completed all examinations required by (e) of this section; the administrator may require an applicant for registration under AS 45.56.330 or 45.56.350 who has not been registered in a state within the two years preceding the filing of an application in this state to complete successfully an examination; or
    15. is a person whose license issuance or renewal is denied under AS 25.27.244 .
  5. A regulation adopted or order issued under this chapter may require that an examination, including an examination developed or approved by an organization of securities regulators, be successfully completed by a class of individuals or all individuals. An order issued under this chapter may waive, in whole or in part, an examination as to an individual and a regulation adopted under this chapter may waive, in whole or in part, an examination as to a class of individuals if the administrator determines that the examination is not necessary or appropriate in the public interest and for the protection of investors.
  6. The administrator may suspend or deny an application summarily; restrict, condition, limit, or suspend a registration; or censure, bar, or impose a civil penalty on a registrant before final determination of an administrative proceeding. Upon the issuance of an order, the administrator shall promptly notify each person subject to the order that the order has been issued, the reasons for the action, and that, within 15 days after the receipt of a request in a record from the person, the matter will be scheduled for a hearing. If a hearing is not requested and none is ordered by the administrator within 30 days after the date of service of the order, the order becomes final by operation of law. If a hearing is requested or ordered, the administrator, after notice of and opportunity for hearing to each person subject to the order, may modify or vacate the order or extend the order until final determination.
  7. An order may not be issued under this section, except under (f) of this section, without appropriate notice to the applicant or registrant, and an opportunity for hearing under AS 45.56.690(c) .
  8. A person that controls, directly or indirectly, a person not in compliance with this section may be disciplined by order of the administrator under (a) — (c) of this section to the same extent as the noncomplying person, unless the controlling person did not know, and in the exercise of reasonable care could not have known, of the existence of conduct that is a ground for discipline under this section.
  9. The administrator may not institute a proceeding under (a) — (c) of this section based solely on material facts actually known by the administrator unless an investigation or the proceeding is instituted within one year after the administrator actually acquires knowledge of the material facts.

History. (§ 25 ch 65 SLA 2018)

Revisor's notes. —

Enacted as AS 45.56.485; renumbered in 2018, at which time references to other renumbered sections were conformed.

In 2018, in paragraph (d)(15), “whose license renewal is denied under AS 14.43.148 or” was removed in order to reconcile sec. 34, ch. 23, SLA 2018, and sec. 25, ch. 65, SLA 2018.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Article 3. Fraud and Liabilities.

History. (§ 25 ch 65 SLA 2018)

Sec. 45.56.500. General fraud.

A person may not, in connection with the offer, sale, or purchase of a security, directly or indirectly,

  1. employ a device, scheme, or artifice to defraud;
  2. make an untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which they were made, not misleading; or
  3. engage in an act, practice, or course of business that operates or would operate as a fraud or deceit on another person.

History. (§ 25 ch 65 SLA 2018)

Revisor's notes. —

Enacted as AS 45.56.505; renumbered in 2018.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.510. Prohibited conduct in providing investment advice.

  1. A person that advises others for compensation, either directly or indirectly or through publications or writings, as to the value of securities or the advisability of investing in, purchasing, or selling securities or that, for compensation and as part of a regular business, issues or adopts analyses or reports relating to securities may not
    1. employ a device, scheme, or artifice to defraud another person; or
    2. engage in an act, practice, or course of business that operates or would operate as a fraud or deceit on another person.
  2. A regulation adopted under this chapter may define an act, practice, or course of business of an investment adviser or an investment adviser representative, other than a supervised person of a federal covered investment adviser, as fraudulent, deceptive, or manipulative and may prescribe means reasonably designed to prevent investment advisers and investment adviser representatives, other than supervised persons of a federal covered investment adviser, from engaging in acts, practices, and courses of business defined as fraudulent, deceptive, or manipulative.
  3. A regulation adopted under this chapter may specify the contents of an investment advisory contract entered into, extended, or renewed by an investment adviser.

History. (§ 25 ch 65 SLA 2018)

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.520. Misleading filings.

A person may not, in a document filed with the administrator or in a proceeding under this chapter, make or cause to be made an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading.

History. (§ 25 ch 65 SLA 2018)

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.530. Misrepresentations concerning registration or exemption.

The filing of an application for registration, a registration statement, a notice filing under this chapter, the registration of a person, the notice filing by a person, or the registration of a security under this chapter does not constitute a finding by the administrator that a record filed under this chapter is true, complete, and not misleading. The filing or registration or the availability of an exemption, exception, preemption, or exclusion for a security or a transaction does not mean that the administrator has passed on the merits or qualifications of, or recommended or given approval to, a person, security, or transaction. A person may not make, or cause to be made, to a purchaser, customer, client, or prospective customer or client a representation inconsistent with this section.

History. (§ 25 ch 65 SLA 2018)

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.540. Evidentiary burden.

  1. In a civil action or administrative proceeding under this chapter, a person claiming an exemption, exception, preemption, or exclusion has the burden to prove the applicability of the claim.
  2. In a criminal proceeding under this chapter, an exemption, exception, preemption, or exclusion claimed by the defendant is an affirmative defense. In this subsection, “affirmative defense” has the meaning given in AS 11.81.900 .

History. (§ 25 ch 65 SLA 2018)

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.550. Filing of sales and advertising literature.

  1. Except as otherwise provided in (b) of this section, a regulation adopted or order issued under this chapter may require the filing of a prospectus, pamphlet, circular, form letter, advertisement, sales literature, or other advertising record relating to a security or investment advice, addressed or intended for distribution to prospective investors, including clients or prospective clients of a person registered or required to be registered as an investment adviser under this chapter.
  2. This section does not apply to sales and advertising literature specified in (a) of this section that relates to a federal covered security, a federal covered investment adviser, or a security or transaction exempted by AS 45.56.110 , 45.56.120 , 45.56.130 , or 45.56.150 , except as required under AS 45.56.110 (7).
  3. The administrator may by regulation or order prohibit the publication, circulation, or use of any advertising considered false or misleading.

History. (§ 25 ch 65 SLA 2018)

Revisor's notes. —

In 2018, “AS 45.56.110 , 45.56.120 , 19 45.56.130 , or 45.56.150 ” was substituted for “AS 45.56.205, 45.56.210 , 45.56.220 , or 45.56.240” and “AS 45.56.110 (7)” was substituted for “AS 45.56.205(7)” to reflect the renumbering of those sections.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.560. Qualified immunity.

A broker-dealer, agent, investment adviser, federal covered investment adviser, or investment adviser representative is not liable to another broker-dealer, agent, investment adviser, federal covered investment adviser, or investment adviser representative for defamation relating to a statement that is contained in a record required by the administrator, a designee of the administrator, the Securities and Exchange Commission, or a self-regulatory organization, unless the person knew, or should have known at the time the statement was made, that it was false in a material respect or the person acted in reckless disregard of the statement’s truth or falsity.

History. (§ 25 ch 65 SLA 2018)

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Article 4. Administration and Judicial Review.

History. (§ 25 ch 65 SLA 2018)

Sec. 45.56.600. Administration.

  1. The department shall administer this chapter.
  2. The administrator or an officer, employee, or designee of the administrator may not use for personal benefit or the benefit of others records or other information obtained by or filed with the administrator that is not public under AS 45.56.620(b) . This chapter does not authorize the administrator or an officer, employee, or designee of the administrator to disclose the record or information, except in accordance with AS 45.56.620(c) , 45.56.630 , or 45.56.680 .
  3. This chapter does not create or diminish a privilege or exemption that exists at common law, by statute or regulation, or otherwise.
  4. The administrator may develop and implement investor education initiatives to inform the public about investing in securities, with particular emphasis on the prevention and detection of securities fraud. In developing and implementing these initiatives, the administrator may collaborate with public and nonprofit organizations with an interest in investor education. The administrator may accept a grant or donation from a person that is not affiliated with the securities industry or from a nonprofit organization, regardless of whether the organization is affiliated with the securities industry, to develop and implement investor education initiatives. This subsection does not authorize the administrator to require participation or monetary contributions of a registrant in an investor education program.

History. (§ 25 ch 65 SLA 2018)

Revisor’s notes. —

Enacted as AS 45.56.605; renumbered in 2018, at which time references to other renumbered sections were conformed.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.610. Administrative files and opinions.

  1. The administrator shall maintain, or designate a person to maintain, a register of applications for registration of securities; registration statements; notice filings; applications for registration of broker-dealers, agents, investment advisors, and investment adviser representatives; notice filings by federal covered investment advisors that are or have been effective under this chapter or former AS 45.55; notices of claims of exemption from registration or notice filing requirements contained in a record; orders issued under this chapter or former AS 45.55; and interpretative opinions or no-action determinations issued under this chapter. The register must be kept according to the existing retention schedule mandated by the department.
  2. The administrator shall make all regulations, forms, interpretative opinions, and orders available to the public.
  3. The administrator shall furnish a copy of a record that is a public record or a certification that the public record does not exist to a person upon request. A copy of the record certified or a certificate by the administrator of a record’s nonexistence is prima facie evidence of a record or its nonexistence.

History. (§ 25 ch 65 SLA 2018)

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.620. Public records; confidentiality.

  1. Except as otherwise provided in (b) of this section, records obtained by the administrator or filed under this chapter, including a record contained in or filed with a registration statement, application, notice filing, or report are public records and are available for public examination under AS 40.25.100 40.25.295 (Alaska Public Records Act).
  2. The following records are not public records under AS 40.25.100 40.25.295 (Alaska Public Records Act) and are not available for public examination under (a) of this section:
    1. a record obtained by the administrator in connection with an audit, examination or inspection under AS 45.56.420(d) or an investigation under 45.56.680 ;
    2. a part of a record filed in connection with a registration statement under AS 45.56.100 and 45.56.170 45.56.190 or a record under AS 45.56.420(d) that contains trade secrets or confidential information if the person filing the registration statement or report has asserted a claim of confidentiality or privilege that is authorized by law;
    3. a record that is not required to be provided to the administrator or filed under this chapter and is provided to the administrator only on the condition that the record may not be subject to public examination or disclosure;
    4. a nonpublic record received from a person specified in AS 45.56.630(a) ; and
    5. a social security number, residential address unless used as a business address, and residential telephone number unless used as a business telephone number, contained in a record that is filed.
  3. If disclosure is for the purpose of a civil, administrative, or criminal investigation, action, or proceeding or to a person specified in AS 45.56.630(a) , the administrator may disclose a record obtained in connection with an audit or inspection under AS 45.56.420(d) or a record obtained in connection with an investigation under AS 45.56.680 .

History. (§ 25 ch 65 SLA 2018)

Revisor's notes. —

Enacted as AS 45.56.615; renumbered in 2018, at which time references to other renumbered sections were conformed.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.630. Uniformity and cooperation with other agencies.

  1. The administrator may cooperate, coordinate, consult, and, subject to AS 45.56.620 , share records and information with the securities regulator of another state, Canada, a Canadian province or territory, a foreign jurisdiction, the Securities and Exchange Commission, the United States Department of Justice, the Commodity Futures Trading Commission, the Federal Trade Commission, the Securities Investor Protection Corporation, a self-regulatory organization, a national or international organization of securities regulators, a federal or state banking and insurance regulator, and a governmental law enforcement agency to bring about greater uniformity in securities matters among the federal government, self-regulatory organizations, states, and foreign governments.
  2. In cooperating, coordinating, consulting, and sharing records and information under this section and in acting by regulation, order, or waiver under this chapter, the administrator may take into consideration in carrying out the public interest the following general policies:
    1. maximizing effectiveness of regulation for the protection of investors;
    2. maximizing uniformity in federal and state regulatory standards; and
    3. minimizing burdens on the business of capital formation, without adversely affecting essentials of investor protection.
  3. The cooperation, coordination, consultation, and sharing of records and information authorized by this section includes
    1. establishing or employing one or more designees as a central depository for registration and notice filings under this chapter and for records required or allowed to be maintained under this chapter;
    2. developing and maintaining uniform forms;
    3. conducting a joint examination or investigation;
    4. holding a joint administrative hearing;
    5. instituting and prosecuting a joint civil or administrative proceeding;
    6. sharing and exchanging personnel;
    7. coordinating registrations under AS 45.56.100 and 45.56.300 45.56.350 and exemptions under AS 45.56.150 ;
    8. sharing and exchanging records, subject to AS 45.56.620 ;
    9. formulating regulations, statements of policy, guidelines, forms, and interpretative opinions and releases;
    10. formulating common systems and procedures;
    11. notifying the public of proposed regulations, forms, statements of policy, and guidelines;
    12. attending conferences and other meetings among securities regulators, that may include representatives of governmental and private sector organizations involved in capital formation, considered necessary or appropriate to promote or achieve uniformity; and
    13. developing and maintaining a uniform exemption from registration for small issuers and taking other steps to reduce the burden of raising investment capital by small businesses.

History. (§ 25 ch 65 SLA 2018)

Revisor’s notes. —

Enacted as AS 45.56.620 ; renumbered in 2018, at which time references to other renumbered sections were conformed.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.640. Securities investor education and training fund.

The securities investor education and training fund is created as a special fund in the general fund to provide funds for the purposes specified in AS 45.56.600(d) . The legislature may appropriate 33 percent of the money received by this state from civil penalties under this chapter into the fund for securities investor education and training. Nothing in this section exempts money deposited into the fund from the requirements of AS 37.07 (Executive Budget Act) or dedicates money for a specific purpose.

History. (§ 25 ch 65 SLA 2018)

Revisor's notes. —

Enacted as AS 45.56.625; renumbered in 2018, at which time a reference to another renumbered section was conformed.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.650. Service of process.

  1. A consent to service of process complying with this section required by this chapter shall be signed and filed in the form required by a regulation adopted or order issued under this chapter. A consent appointing the administrator the person’s agent for service of process in a noncriminal action or proceeding against the person or the person’s successor or personal representative under this chapter or a regulation adopted or order issued under this chapter after the consent is filed has the same force and validity as if the service were made personally on the person filing the consent. A person that has filed a consent under this subsection in connection with a previous application for registration or notice filing need not file an additional consent.
  2. If a person, including a nonresident of this state, engages in an act, practice, or course of business prohibited or made actionable by this chapter or a regulation adopted or order issued under this chapter and the person has not filed a consent to service of process under (a) of this section, the act, practice, or course of business constitutes the appointment of the administrator as the person’s agent for service of process in a noncriminal action or proceeding against the person or the person’s successor or personal representative.
  3. Service under (a) or (b) of this section may be made by providing a copy of the process to the office of the administrator, but the service is not effective unless
    1. the plaintiff, which may be the administrator, promptly sends notice of the service and a copy of the process, return receipt requested, to the defendant or respondent at the address set out in the consent to service of process or, if a consent to service of process has not been filed, at the last known address, or takes other reasonable steps to give notice; and
    2. the plaintiff files an affidavit of compliance with this subsection in the action or proceeding on or before the return day of the process, if any, or within the time that the court, or the administrator in a proceeding before the administrator, allows.
  4. Service under (c) of this section may be used in a proceeding before the administrator or by the administrator in a civil action in which the administrator is the moving party.
  5. If process is served under (c) of this section, the court, or the administrator in a proceeding before the administrator, shall order continuances as are necessary or appropriate to afford the defendant or respondent reasonable opportunity to defend.

History. (§ 25 ch 65 SLA 2018)

Revisor's notes. —

Enacted as AS 45.56.630 ; renumbered in 2018.

Cross references. —

For the effect of subsections (c) — (e) on Rules 4 and 5, Alaska Rules of Civil Procedure, see sec. 30(a), ch. 65, SLA 2018, in the 2018 Temporary and Special Acts.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.660. Applicability of the chapter.

  1. Unless the persons are exempt elsewhere in this chapter, this chapter applies to persons who buy or offer to buy when an offer to
    1. buy is made in this state; or
    2. sell is made and accepted in this state.
  2. Unless the person is exempt elsewhere in this chapter, this chapter applies to a person who sells or offers to sell when an offer to
    1. sell is made in this state; or
    2. buy is made and accepted in this state.
  3. For the purpose of this section, an offer to sell or to buy is made in this state, whether or not either party is then present in this state, when the offer
    1. originates from this state;
    2. is directed by the offeror to this state and received at the place to which it is directed or at a post office in this state in the case of a mailed offer;
    3. is for an interest or participation in an oil, gas, or mining right, title, or lease on land in this state, including submerged land, regardless of where the offer is made;
    4. is for an interest or participation in payments out of production under an oil, gas, or mining right, title, or lease on land in this state, including submerged land, regardless of where the offer is made;
    5. is for an interest or participation in real property located in this state, or in a corporation, a partnership, a limited liability company, a limited partnership, a limited liability partnership, an association, or a joint-stock company; jurisdiction under this paragraph may be exercised only when the exercise is consistent with the constitution of this state or of the United States.
  4. For the purpose of this section, an offer to buy or to sell is accepted in this state when acceptance is communicated to the offeror in this state and has not previously been communicated to the offeror, orally or in writing, outside this state. Acceptance is communicated to the offeror in this state, whether or not either party is then present in this state, when the offeree directs the acceptance to the offeror in this state reasonably believing the offeror to be in this state and the acceptance is received at the place to which it is directed or, in the case of a mailed acceptance, at a post office in this state.
  5. This chapter applies to investment advisers, federal covered advisers, and investment adviser representatives when any act instrumental in effecting prohibited conduct is done in this state, regardless of whether either party is then present in this state.

History. (§ 25 ch 65 SLA 2018)

Revisor’s notes. —

Enacted as AS 45.56.635; renumbered in 2018.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.670. Regulations, forms, orders, interpretative opinions, and hearings.

  1. The administrator may
    1. issue forms and orders; after notice and comment, adopt and amend regulations necessary or appropriate to carry out this chapter; and repeal regulations, including regulations and forms governing registration statements, applications, notice filings, reports, and other records;
    2. by regulation, define terms, whether or not used in this chapter, but those definitions may not be inconsistent with this chapter; and
    3. by regulation, classify securities, persons, and transactions and adopt different requirements for different classes.
  2. Under this chapter, a regulation or form may not be adopted or amended, or an order issued or amended, unless the administrator finds that the regulation, form, order, or amendment is necessary or appropriate in the public interest or for the protection of investors and is consistent with the purposes intended by this chapter. In adopting, amending, and repealing regulations and forms, AS 45.56.630 applies to achieve uniformity among the states and coordination with federal laws in the form and content of registration statements, applications, reports, and other records, including the adoption of uniform rules, forms, and procedures.
  3. Subject to 15 U.S.C. 78o(i) and 80b-18a, the administrator may require that a financial statement filed under this chapter be prepared in accordance with generally accepted accounting principles in the United States and comply with other requirements specified by regulation adopted or order issued under this chapter. A regulation adopted or order issued under this chapter may establish
    1. subject to 15 U.S.C. 78o(i) and 80b-18a, the form and content of financial statements required under this chapter;
    2. whether unconsolidated financial statements must be filed; and
    3. whether required financial statements must be audited by an independent certified public accountant.
  4. The administrator may provide interpretative opinions or issue determinations that the administrator will not institute a proceeding or an action under this chapter against a specified person for engaging in a specified act, practice, or course of business if the determination is consistent with this chapter. A regulation adopted or order issued under this chapter may establish a reasonable charge for interpretative opinions or determinations that the administrator will not institute an action or a proceeding under this chapter.
  5. A hearing in an administrative proceeding under this chapter shall be conducted in public unless the administrative law judge or the administrator for good cause consistent with this chapter determines that the hearing may not be conducted in public.
  6. AS 44.62 (Administrative Procedure Act) applies to all regulations adopted or authorized under this chapter.

History. (§ 25 ch 65 SLA 2018)

Revisor’s notes. —

Enacted as AS 45.56.640 ; renumbered in 2018, at which time a reference to another renumbered section was conformed.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.680. Investigations and subpoenas.

  1. The administrator may
    1. conduct public or private investigations in or outside of this state that the administrator considers necessary or appropriate to determine whether a person has violated, is violating, or is about to violate this chapter or a regulation adopted or order issued under this chapter, or to aid in the enforcement of this chapter or in the adoption of regulations and forms under this chapter;
    2. require or permit a person to testify, file a statement, or produce a record, under oath or otherwise as the administrator determines, as to all the facts and circumstances concerning a matter to be investigated or about which an action or proceeding is to be instituted; and
    3. publish a record concerning an action, proceeding, or an investigation under, or a violation of, this chapter or a regulation adopted or order issued under this chapter if the administrator determines it is necessary or appropriate in the public interest and for the protection of investors.
  2. For the purpose of an investigation under this chapter, the administrator or the designated officer of the administrator may administer oaths and affirmations, subpoena witnesses, seek compulsion of attendance, take evidence, require the filing of statements, and require the production of any records that the administrator considers relevant or material to the investigation.
  3. If a person does not appear or refuses to testify, file a statement, produce records, or otherwise obey a subpoena as required by the administrator under this chapter, the administrator may refer the matter to the attorney general, who may bring an action in the superior court or a court of another state to enforce compliance. The court may
    1. hold the person in contempt;
    2. order the person to appear before the administrator;
    3. order the person to testify about the matter under investigation or in question;
    4. order the production of records;
    5. grant injunctive relief, including restricting or prohibiting the offer or sale of securities or the providing of investment advice;
    6. impose a civil penalty of not more than $100,000 for a single violation; and
    7. grant any other necessary or appropriate relief.
  4. This section does not preclude a person from applying to the superior court or a court of another state for relief from a request to appear, testify, file a statement, produce records, or obey a subpoena.
  5. A person is not excused from attending, testifying, filing a statement, producing a record or other evidence, or obeying a subpoena of the administrator under this chapter or in an action or proceeding instituted by the administrator under this chapter on the ground that the required testimony, statement, record, or other evidence, directly or indirectly, may tend to incriminate the individual or subject the individual to a criminal fine, penalty, or forfeiture. If the person refuses to testify, file a statement, or produce a record or other evidence based on the individual’s privilege against self-incrimination, the administrator may apply to the superior court to compel the testimony, the filing of the statement, the production of the record, or the giving of other evidence. The testimony, record, or other evidence compelled under an order of the superior court may not be used, directly or indirectly, against the individual in a criminal case, except in a prosecution for perjury, contempt, or otherwise failing to comply with the order.
  6. At the request of the securities regulator of another state or a foreign jurisdiction, the administrator may provide assistance if the requesting regulator states that it is conducting an investigation to determine whether a person has violated, is violating, or is about to violate a law or regulation of the other state or foreign jurisdiction relating to securities matters that the requesting regulator administers or enforces. The administrator may provide the assistance by using the authority to investigate and the powers conferred by this section as the administrator determines is necessary or appropriate. The assistance may be provided without regard to whether the conduct described in the request would also constitute a violation of this chapter or other law of this state if occurring in this state. In deciding whether to provide the assistance, the administrator may consider whether the requesting regulator is permitted and has agreed to provide assistance reciprocally within its state or foreign jurisdiction to the administrator on securities matters when requested, whether compliance with the request would violate or prejudice the public policy of this state, and the availability of resources and employees of the administrator to carry out the request for assistance.

History. (§ 25 ch 65 SLA 2018)

Revisor’s notes. —

Enacted as AS 45.56.645; renumbered in 2018.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.690. Administrative enforcement.

  1. If the administrator determines that a person has engaged, is engaging, or is about to engage in an act, practice, or course of business constituting a violation of this chapter or a regulation adopted or order issued under this chapter or that a person has materially aided, is materially aiding, or is about to aid materially an act, practice, or course of business constituting a violation of this chapter or a regulation adopted or order issued under this chapter, the administrator may issue an order
    1. directing the person to cease and desist from engaging in the act, practice, or course of business or to take other action necessary or appropriate to comply with this chapter;
    2. denying, suspending, revoking, or conditioning the exemptions for a broker-dealer under AS 45.56.300(b)(1)(D) or (F) or an investment adviser under AS 45.56.340(b)(1)(C) ; or
    3. denying, suspending, conditioning, or limiting an exemption as provided under AS 45.56.160 .
  2. An order under (a) of this section is effective on the date of issuance. Upon issuance of the order, the administrator shall promptly serve each person subject to the order with a copy of the order and a notice that the order has been entered. The order must include a statement of any civil penalty, restitution, or costs of investigation the administrator will seek, a statement of the reasons for the order, and notice that, within 15 days after receipt of a request in a record from the person, the matter will be scheduled for a hearing. If a person subject to the order does not request a hearing and none is ordered by the administrator within 30 days after the date of service of the order, the order, including the imposition of a civil penalty, the imposition of restitution, or requirement for payment of the costs of investigation sought in a statement in the order, becomes final as to that person by operation of law. If a hearing is requested or ordered, the administrator, after notice of and opportunity for hearing provided to each person subject to the order, may modify or vacate the order or extend it until final determination.
  3. If a hearing is requested or ordered under (b) of this section, a hearing shall be conducted by the office of administrative hearings (AS 44.64.010 ), and AS 44.64.040 44.64.200 apply to and govern the hearing.
  4. In a final order under (b) of this section, the administrator may impose a civil penalty of not more than $100,000 for a single violation, unless the violation of this chapter is against an older person or a vulnerable adult. In addition to a civil penalty imposed under this subsection, a person or entity who engages in conduct prohibited under this chapter against an older person or a vulnerable adult may be liable for an additional civil penalty of treble statutory damages. In determining whether to impose a supplemental civil penalty under this subsection, the administrator shall consider, in addition to other appropriate factors, the extent to which the following factors are present:
    1. whether the respondent knew that the respondent’s conduct was directed to an older person or a vulnerable adult;
    2. whether the respondent’s conduct caused an older person or a vulnerable adult to suffer
      1. severe loss or encumbrance of a primary residence, principal employment, or source of income; or
      2. substantial loss of property set aside for retirement or for personal and family care and maintenance; or
    3. whether the respondent’s conduct caused substantial loss of payments received under a pension or retirement plan or a government benefits program.
  5. In a final order under (b) of this section, the administrator may
    1. impose restitution to any person in interest for any money or property, real or personal, that may have been acquired or transferred in violation of this chapter;
    2. charge the actual cost of an investigation or proceeding for a violation of this chapter or a regulation adopted or order issued under this chapter; and
    3. deny the violator the use of any exemptions listed under this chapter.
  6. The administrator may petition the superior court to enter a judgment against a person who is a respondent in the order for the amount of the civil penalty levied against the person. Subject to AS 44.62.570 , the filing of the petition for a judgment does not reopen the final order to further substantive review. A judgment entered under this subsection may be executed on and levied under in the manner provided in AS 09.35.
  7. If a person does not comply with an order under this section, the administrator may petition a court of competent jurisdiction to enforce the order. The court may not require the administrator to post a bond in an action or proceeding under this section. If the court finds, after service and opportunity for hearing, that the person was not in compliance with the order, the court may adjudge the person in civil contempt of the order. The court may impose a further civil penalty against the person for contempt in an amount not less than $5,000 but not greater than $100,000 for each violation and may grant any other relief the court determines is just and proper in the circumstances.

History. (§ 25 ch 65 SLA 2018)

Revisor’s notes. —

Enacted as AS 45.56.650 ; renumbered in 2018, at which time references to other renumbered sections were conformed.

Cross references. —

For the effect of subsections (f) and (g) on Rules 54 and 90, Alaska Rules of Civil Procedure, see secs. 30(b) and (c), ch. 65, SLA 2018, in the 2018 Temporary and Special Acts.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.700. Civil enforcement.

  1. If the administrator believes that a person has engaged, is engaging, or is about to engage in an act, practice, or course of business constituting a violation of this chapter or a regulation adopted or order issued under this chapter, or that a person has engaged, is engaging, or is about to engage in an act, practice, or course of business that materially aids a violation of this chapter or a regulation adopted or order issued under this chapter, the administrator may maintain an action in the superior court to enjoin the act, practice, or course of business and to enforce compliance with this chapter or a regulation adopted or order issued under this chapter.
  2. In an action under this section and on a proper showing, the court may
    1. issue a permanent or temporary injunction, restraining order, or declaratory judgment;
    2. order other appropriate or ancillary relief, which may include
      1. an asset freeze, accounting, writ of attachment, writ of general or specific execution, and appointment of a receiver or conservator that may be the administrator for the defendant or the defendant’s assets;
      2. ordering the administrator to take charge and control of a defendant’s property, including investment accounts and accounts in a depository institution, rents, and profits; to collect debts; and to acquire and dispose of property;
      3. imposing a civil penalty of not more than $100,000 for a single violation, unless the violation of this chapter is against an older person or a vulnerable adult; in determining whether to impose a supplemental civil penalty for a violation of this chapter against an older person or a vulnerable adult, the court shall consider, in addition to other appropriate factors, the extent to which the following factors are present:
        1. whether the respondent knew that the respondent’s conduct was directed to an older person or a vulnerable adult;
        2. whether the respondent’s conduct caused an older person or a vulnerable adult to suffer severe loss or encumbrance of a primary residence, principal employment, or source of income; or substantial loss of property set aside for retirement or for personal and family care and maintenance; or
        3. whether the respondent’s conduct caused substantial loss of payments received under a pension or retirement plan or a government benefits program;
      4. imposing an order of rescission, or disgorgement directed to a person that has engaged in an act, practice, or course of business constituting a violation of this chapter or former AS 45.55 or a regulation adopted or order issued under this chapter or former AS 45.55;
      5. imposing an order of restitution to any person in interest for any money or property, real or personal, that may have been acquired or transferred in violation of this chapter; and
      6. ordering the payment of prejudgment and post judgment interest; or
    3. order other relief that the court considers appropriate.
  3. The administrator may not be required to post a bond in an action or proceeding under this chapter.
  4. After an order issued by the court under (b) of this section becomes final and all rights of appeal are exhausted, the administrator may petition the superior court to enter a judgment against a person who is a respondent in the order for the amount of the civil penalty levied against the person. Subject to AS 44.62.570 , the filing of the petition for a judgment does not reopen the final order to further substantive review. A judgment entered under this subsection may be executed on and levied under in the manner provided in AS 09.35.

History. (§ 25 ch 65 SLA 2018)

Revisor’s notes. —

Enacted as AS 45.56.655; renumbered in 2018.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.710. Civil liability.

  1. Enforcement of civil liability under this section is subject to P.L. 105-353 (Securities Litigation Uniform Standards Act of 1998).
  2. A person is liable to the purchaser if the person sells a security in violation of AS 45.56.100 , or by means of an untrue statement of a material fact or an omission to state a material fact necessary to make the statement made, in light of the circumstances under which it is made, not misleading, the purchaser not knowing the untruth or omission and the seller not sustaining the burden of proof that the seller did not know and, in the exercise of reasonable care, could not have known of the untruth or omission. An action under this subsection is governed by the following:
    1. the purchaser may maintain an action to recover the consideration paid for the security, less the amount of any income received on the security, and interest at the legal rate of interest under AS 09.30.070 , or eight percent a year, whichever is greater, from the date of the purchase, costs, and attorney fees as determined by the court, upon the tender of the security, or for actual damages as provided in (3) of this subsection;
    2. the tender referred to in (1) of this subsection may be made any time before entry of judgment; tender requires only notice in a record of ownership of the security and willingness to exchange the security for the amount specified; a purchaser that no longer owns the security may recover actual damages as provided in (3) of this subsection;
    3. actual damages in an action arising under this subsection are the amount that would be recoverable upon a tender less the value of the security when the purchaser disposed of it, and interest at the legal rate of interest under AS 09.30.070 , or eight percent a year, whichever is greater, from the date of the purchase, costs, and attorney fees as determined by the court.
  3. A person is liable to the seller if the person buys a security by means of an untrue statement of a material fact or omission to state a material fact necessary to make the statement made, in light of the circumstances under which it is made, not misleading, the seller not knowing of the untruth or omission, and the purchaser not sustaining the burden of proof that the purchaser did not know and, in the exercise of reasonable care, could not have known of the untruth or omission. An action under this subsection is governed by the following:
    1. the seller may maintain an action to recover the security and any income received on the security, costs, and attorney fees as determined by the court, upon the tender of the purchase price, or for actual damages as provided in (3) of this subsection;
    2. the tender referred to in (1) of this subsection may be made any time before entry of judgment; tender requires only notice in a record of the present ability to pay the amount tendered and willingness to take delivery of the security for the amount specified; if the purchaser no longer owns the security, the seller may recover actual damages as provided in (3) of this subsection;
    3. actual damages in an action arising under this subsection are the difference between the price at which the security was sold and the value the security would have had at the time of the sale in the absence of the purchaser’s conduct causing liability, and interest at the legal rate of interest under AS 09.30.070 , or eight percent a year, whichever is greater, from the date of the sale of the security, costs, and attorney fees as determined by the court.
  4. A person acting as a broker-dealer or agent that sells or buys a security in violation of AS 45.56.300(a) , 45.56.340(a) , or 45.56.530 is liable to the customer. The customer, if a purchaser, may maintain an action for recovery of actual damages as specified in (b) of this section or, if a seller, for a remedy as specified in (c) of this section.
  5. A person acting as an investment adviser or investment adviser representative that provides investment advice for compensation in violation of AS 45.56.340(a) , 45.56.350(a) , or 45.56.530 is liable to the client. The client may maintain an action to recover the consideration paid for the advice, interest at the legal rate of interest under AS 09.30.070 , or eight percent a year, whichever is greater, from the date of payment, costs, and attorney fees as determined by the court.
  6. A person that receives, directly or indirectly, any consideration for providing investment advice to another person and that employs a device, scheme, or artifice to defraud the other person or engages in an act, practice, or course of business that operates or would operate as a fraud or deceit on the other person is liable to the other person. An action under this subsection is governed by the following:
    1. the person defrauded may maintain an action to recover the consideration paid for the advice and the amount of any actual damages caused by the fraudulent conduct, interest at the legal rate of interest under AS 09.30.070 , or eight percent a year, whichever is greater, from the date of the fraudulent conduct, costs, and reasonable attorney fees as determined by the court, less the amount of any income received as a result of the fraudulent conduct;
    2. this subsection does not apply to a broker-dealer or its agents if the investment advice provided is solely incidental to transacting business as a broker-dealer and special compensation is not received for the investment advice.
  7. The following persons are liable jointly and severally with and to the same extent as persons liable under (b) — (f) of this section:
    1. a person that directly or indirectly controls a person liable under (b) — (f) of this section, unless the controlling person sustains the burden of proof that the person did not know and, in the exercise of reasonable care, could not have known of the existence of conduct because of which the liability is alleged to exist;
    2. an individual who is a managing partner, executive officer, or director of a person liable under (b) — (f) of this section, including an individual having a similar status or performing similar functions, unless the individual sustains the burden of proof that the individual did not know and, in the exercise of reasonable care, could not have known of the existence of conduct because of which the liability is alleged to exist;
    3. an individual who is an employee of or associated with a person liable under (b) — (f) of this section and who materially aids the conduct giving rise to the liability, unless the individual sustains the burden of proof that the individual did not know and, in the exercise of reasonable care, could not have known of the existence of conduct because of which the liability is alleged to exist; and
    4. a person that is a broker-dealer, agent, investment adviser, or investment adviser representative that materially aids the conduct giving rise to the liability under (b) — (f) of this section, unless the person sustains the burden of proof that the person did not know and, in the exercise of reasonable care, could not have known of the existence of conduct because of which the liability is alleged to exist.
  8. A person liable under this section has a right of contribution as in cases of contract against any other person liable under this section for the same conduct.
  9. A cause of action under this section survives the death of an individual who might have been a plaintiff or defendant.
  10. A person may not obtain relief under (b) of this section
    1. for a violation of AS 45.56.100 , or under (d) or (e) of this section, unless the action is instituted within three years after the violation occurred; or
    2. other than for a violation of AS 45.56.100 , or under (c) or (f) of this section, unless the action is instituted within the earlier of two years after discovery of the facts constituting the violation or five years after the violation.
  11. A person that has made, or has engaged in the performance of, a contract in violation of this chapter or a regulation adopted or order issued under this chapter or that has acquired a purported right under the contract with knowledge of conduct because of which its making or performance was in violation of this chapter may not base an action on the contract.
  12. A condition, stipulation, or provision binding a person purchasing or selling a security or receiving investment advice to waive compliance with this chapter or a regulation adopted or order issued under this chapter is void.
  13. The rights and remedies provided by this chapter are in addition to any other rights or remedies that may exist, but this chapter does not create a cause of action not specified in this section or AS 45.56.420(e) .

History. (§ 25 ch 65 SLA 2018)

Revisor's notes. —

Enacted as AS 45.56.660 ; renumbered in 2018, at which time references to other renumbered sections were conformed.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.720. Rescission offers.

  1. A purchaser, seller, or recipient of investment advice may not maintain an action under AS 45.56.710 if
    1. the purchaser, seller, or recipient of investment advice receives, in a record, before the action is instituted,
      1. an offer stating the respect in which liability under AS 45.56.710 may have arisen and fairly advising the purchaser, seller, or recipient of investment advice of that person’s rights in connection with the offer and any financial or other information necessary to correct all material misrepresentations or omissions in the information that was required by this chapter to be furnished to that person at the time of the purchase, sale, or investment advice;
      2. if the basis for relief under this section may have been a violation of AS 45.56.710(b) , an offer to repurchase the security for cash, payable on delivery of the security, equal to the consideration paid, and interest at the legal rate of interest under AS 09.30.070 , or eight percent a year, whichever is greater, from the date of the purchase, less the amount of any income received on the security, or, if the purchaser no longer owns the security, an offer to pay the purchaser, upon acceptance of the offer, damages in an amount that would be recoverable upon a tender, less the value of the security when the purchaser disposed of it, and interest at the legal rate of interest under AS 09.30.070 , or eight percent a year, whichever is greater, from the date of the purchase in cash equal to the damages computed in the manner provided in this subparagraph;
      3. if the basis for relief under this section may have been a violation of AS 45.56.710(c) , an offer to tender the security, on payment by the seller of an amount equal to the purchase price paid, less income received on the security by the purchaser and interest at the legal rate of interest under AS 09.30.070, or eight percent a year, whichever is greater, from the date of the sale, or, if the purchaser no longer owns the security, an offer to pay the seller, upon acceptance of the offer, in cash, damages in the amount of the difference between the price at which the security was purchased and the value the security would have had at the time of the purchase in the absence of the purchaser’s conduct that may have caused liability and interest at the legal rate of interest in AS 09.30.070, or eight percent a year, whichever is greater, from the date of the sale;
      4. if the basis for relief under this section may have been a violation of AS 45.56.710(d) ; and if the customer is a purchaser, an offer to pay as specified in (B) of this paragraph; or, if the customer is a seller, an offer to tender or to pay as specified in (C) of this paragraph;
      5. if the basis for relief under this section may have been a violation of AS 45.56.710(e) , an offer to reimburse in cash the consideration paid for the advice and interest at the legal rate of interest under AS 09.30.070, or eight percent a year, whichever is greater, from the date of payment; or
      6. if the basis for relief under this section may have been a violation of AS 45.56.710(f) , an offer to reimburse in cash the consideration paid for the advice, the amount of any actual damages that may have been caused by the conduct, and interest at the legal rate of interest under AS 09.30.070, or eight percent a year, whichever is greater, from the date of the violation causing the loss;
    2. the offer under (1) of this subsection states that it must be accepted by the purchaser, seller, or recipient of investment advice within 30 days after the date of its receipt by the purchaser, seller, or recipient of investment advice or any shorter period of not less than three days that the administrator, by order, specifies;
    3. the offeror has the present ability to pay the amount offered or to tender the security under (1) of this subsection;
    4. the offer under (1) of this subsection is delivered to the purchaser, seller, or recipient of investment advice or sent in a manner that ensures receipt by the purchaser, seller, or recipient of investment advice; and
    5. the purchaser, seller, or recipient of investment advice that accepts the offer under (1) of this subsection, in a record, within the period specified under (2) of this subsection, is paid in accordance with the terms of the offer.
  2. The offer under this section shall be filed with the administrator 10 business days before the offering and conform in form and content with a regulation adopted under this chapter.

History. (§ 25 ch 65 SLA 2018)

Revisor’s notes. —

Enacted as AS 45.56.665; renumbered in 2018, at which time references to other renumbered sections were conformed.

Cross references. —

For the effect of subsection (c) on Rule 65, Alaska Rules of Civil Procedure, see sec. 30(d), ch. 65, SLA 2018, in the 2018 Temporary and Special Acts.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.730. Criminal enforcement.

  1. A person who intentionally violates this chapter, except AS 45.56.550 or the notice filing requirements of AS 45.56.200 or 45.56.360 , is guilty of a class C felony punishable by imprisonment under AS 12.55.125 or by a fine of not more than $100,000, or by both.
  2. A person who intentionally alters, destroys, shreds, mutilates, or conceals a record, document, or other object, or attempts to do so, with the intent to alter or impair the record, document, or object for use in an official proceeding under this chapter, is guilty of a class C felony. A person convicted of violating this subsection is punishable by imprisonment as provided in AS 12.55.125 , by a fine of not more than $500,000, or by both.
  3. The attorney general, with or without a reference from the administrator, may institute criminal proceedings under this chapter.
  4. This chapter does not limit the power of this state to punish a person for conduct that constitutes a crime under other laws of this state.
  5. In this section, “intentionally” has the meaning given in AS 11.81.900(a) .

History. (§ 25 ch 65 SLA 2018)

Revisor's notes. —

Enacted as AS 45.56.670 ; renumbered in 2018, at which time references to other renumbered sections were conformed.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.740. Judicial review.

  1. A person may obtain judicial review by the superior court of a final order issued by the administrator under this chapter by filing a notice of appeal in accordance with the applicable rules of court governing appeals in civil matters. The notice of appeal shall be filed within 30 days after the order becomes final under AS 44.64.060 .
  2. A regulation adopted under this chapter is subject to judicial review under AS 44.62.300 .

History. (§ 25 ch 65 SLA 2018)

Revisor’s notes. —

Enacted as AS 45.56.675; renumbered in 2018.

Cross references. —

For the effect of subsection (a) on Rules 602, Alaska Rules of Appellate Procedure, see sec. 30(e), ch. 65, SLA 2018, in the 2018 Temporary and Special Acts.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.800. Reimbursement of expenses incident to examination or investigation.

  1. The administrator may require an issuer, broker-dealer, agent, investment adviser representative, federal covered adviser, or investment adviser to reimburse the administrator for actual travel expenses and per diem incurred in connection with an examination or investigation under this chapter.
  2. The administrator may by regulation or order adopt a schedule of charges for examination and investigation of issuers, broker-dealers, agents, investment adviser representatives, federal covered advisers, and investment advisers.
  3. If an issuer, broker-dealer, agent, investment adviser representative, federal covered adviser, or investment adviser fails to pay the fees and expenses provided for in this section, the fees and expenses shall be paid out of funds of the administrator in the same manner as other disbursements made by the administrator. The amounts paid from the funds of the administrator are a lien on all of the assets and property of the issuer, broker-dealer, agent, investment adviser representative, federal covered adviser, or investment adviser, and the amount may be recovered by the attorney general on behalf of this state.
  4. Failure of the issuer, broker-dealer, agent, investment adviser representative, federal covered adviser, or investment adviser to pay fees and expenses under this section is a willful violation of this chapter, and the violation falls within the provisions of  AS 45.56.220 , 45.56.350 , and 45.56.620 .

History. (§ 25 ch 65 SLA 2018)

Revisor’s notes. —

Enacted as AS 45.56.710 ; renumbered in 2018, at which time references to other renumbered sections were conformed.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.810. Electronic records and signatures.

This chapter 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 any of the notices described in 15 U.S.C. 7003(b). This chapter authorizes the filing of records and signatures, when specified by provisions of this chapter or by a regulation adopted or order issued under this chapter, in a manner consistent with 15 U.S.C. 7004(a).

History. (§ 25 ch 65 SLA 2018)

Revisor’s notes. —

Enacted as AS 45.56.720 ; renumbered in 2018.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.820. References to federal statutes.

In this chapter, a reference to the following federal statutes, including a statute within a spanned reference, means those statutes and the rules and regulations adopted under those statutes, as in effect on the date of enactment of this chapter:

  1. 7 U.S.C. 1 — 27 (Commodity Exchange Act);
  2. 15 U.S.C. 77a — 77aa (Securities Act of 1933);
  3. 15 U.S.C. 77b, 77k, 77m, 77p, 77r, 77v, 77z-1 — 77z-3, 77aa, 77ccc, 77ddd, 77mmm, 77sss, 78a, 78c, 78d, 78g, 78n, 78o, 78o-4, 78o-5, 78s, 78t, 78u, 78u-4, 78z, 78bb, 78ee, 78kk, 78ll, 80a-2, 80a-3, 80a-12, 80a-18, 80a-29, 80a-30, 80b-3, and 80b-18a (Securities Litigation Uniform Standards Act of 1998);
  4. 15 U.S.C. 78a — 78pp (Securities Exchange Act of 1934);
  5. 15 U.S.C. 80a-1 — 80a-64 (Investment Company Act of 1940);
  6. 15 U.S.C. 80b-1 — 80b-21 (Investment Advisers Act of 1940);
  7. 15 U.S.C. 661 — 697g (Small Business Investment Act of 1958);
  8. 15 U.S.C. 7001 — 7031 (Electronic Signatures in Global and National Commerce Act);
  9. 26 U.S.C. (Internal Revenue Code);
  10. 29 U.S.C. 1001 — 1461 (Employee Retirement Income Security Act of 1974);
  11. 42 U.S.C. 16451 — 16481 (Energy Policy Act of 2005).

History. (§ 25 ch 65 SLA 2018)

Revisor's notes. —

Enacted as AS 45.56.730 ; renumbered in 2018.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.830. References to federal agencies.

A reference in this chapter to an agency or department of the United States is also a reference to a successor agency or department.

History. (§ 25 ch 65 SLA 2018)

Revisor’s notes. —

Enacted as AS 45.56.740 ; renumbered in 2018.

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.900. Definitions.

In this chapter, unless the context otherwise requires,

  1. “administrator” means the commissioner of commerce, community, and economic development or a designee of the commissioner;
  2. “agent” means an individual, other than a broker-dealer, who represents a broker-dealer in effecting or attempting to effect purchases or sales of securities or represents an issuer in effecting or attempting to effect purchases or sales of the issuer’s securities; however, a partner, officer, or director of a broker-dealer or issuer, or an individual having a similar status or performing similar functions is an agent only if the individual otherwise comes within the term; “agent” does not include an individual excluded by a regulation adopted or order issued under this chapter;
  3. “bank” means
    1. a banking institution organized under the laws of the United States;
    2. a member bank of the Federal Reserve System;
    3. any other banking institution, whether incorporated or not, doing business under the laws of a state or of the United States, a substantial portion of the business of which consists of receiving deposits or exercising fiduciary powers similar to those permitted to be exercised by national banks under the authority of the United States Comptroller of the Currency under 12 U.S.C. 92a, that is supervised and examined by a state or federal agency having supervision over banks, and that is not operated for the purpose of evading this chapter; and
    4. a receiver, conservator, or other liquidating agent of any institution or firm included in (A), (B), or (C) of this paragraph;
  4. “broker-dealer” means a person engaged in the business of effecting transactions in securities for the accounts of others or for the person’s own account; “broker-dealer” does not include
    1. an agent;
    2. an issuer;
    3. a bank, trust company organized or chartered under the laws of this state, or savings institution if its activities as a broker-dealer are limited to those specified in 15 U.S.C. 78c(a)(4)(B)(i) — (vi), (viii) — (x), and (xi) if limited to unsolicited transactions, or 15 U.S.C.   78c(a)(5)(B) and (C), or a bank that satisfies the conditions described in 15 U.S.C. 78c(a)(4);
    4. an international banking institution; or
    5. a person excluded by a regulation adopted or order issued under this chapter;
  5. “defraud” includes engaging in common law deceit;
  6. “department” means the Department of Commerce, Community, and Economic Development;
  7. “depository institution” means
    1. a bank; or
    2. a savings institution, trust company, credit union, or similar institution that is organized or chartered under the laws of a state or of the United States, authorized to receive deposits and supervised and examined by an official or agency of a state or the United States if its deposits or share accounts are insured to the maximum amount authorized by statute by the Federal Deposit Insurance Corporation, the National Credit Union Share Insurance Fund, or a successor authorized by federal law; “depository institution” does not include
      1. an insurance company or other organization primarily engaged in the business of insurance;
      2. a Morris Plan bank; or
      3. an industrial loan company that is not an insured depository institution as defined in 12 U.S.C. 1813(c)(2) (Federal Deposit Insurance Act), or any successor federal statute;
  8. “federal covered investment adviser” means a person registered under 15 U.S.C. 80b-1 — 80b-21 (Investment Advisers Act of 1940);
  9. “federal covered security” means a security that is, or upon completion of a transaction will be, a covered security under 15 U.S.C. 77r(b) (Securities Act of 1933) or rules or regulations adopted under that provision;
  10. “filing” means the receipt under this chapter of a record by the administrator or a designee of the administrator;
  11. “former AS 45.55” means AS 45.55 as the provisions under that chapter read on the day before the effective date of this section;
  12. “fraud” and “deceit” include common law deceit;
  13. “guaranteed” means guaranteed as to payment of all principal and all interest;
  14. “institutional investor” means any of the following, whether acting for itself or for others in a fiduciary capacity:
    1. a depository institution, a trust company organized or chartered under the laws of this state, or an international banking institution;
    2. an insurance company;
    3. a separate account of an insurance company;
    4. an investment company as defined in 15 U.S.C. 80a-1 — 80a-64 (Investment Company Act of 1940);
    5. a broker-dealer registered under 15 U.S.C. 78a – 78pp (Securities Exchange Act of 1934);
    6. an employee pension, profit-sharing, or benefit plan if the plan has total assets in excess of $10,000,000 or its investment decisions are made by a named fiduciary, as defined in 29 U.S.C. 1102(a)(2) (Employee Retirement Income Security Act of 1974), that is a broker-dealer registered under 15 U.S.C.  78a — 78pp (Securities Exchange Act of 1934), an investment adviser registered or exempt from registration under 15 U.S.C. 80b-1 — 80b-21 (Investment Advisers Act of 1940), an investment adviser registered under this chapter, a depository institution, or an insurance company;
    7. a plan established and maintained by a state, a political subdivision of a state, or an agency or instrumentality of a state or a political subdivision of a state for the benefit of its employees if the plan has total assets in excess of $10,000,000 or its investment decisions are made by a legally designated public official or by a named fiduciary, as defined in 29 U.S.C. 1102(a)(2) (Employee Retirement Income Security Act of 1974), that is a broker-dealer registered under 15 U.S.C.  78a — 78pp (Securities Exchange Act of 1934), an investment adviser registered or exempt from registration under 15 U.S.C. 80b-1 — 80b-21 (Investment Advisers Act of 1940), an investment adviser registered under this chapter, a depository institution, or an insurance company;
    8. a trust if that trust has total assets in excess of $10,000,000, the trustee of the trust is a depository institution, and the participants in the trust are exclusively plans of the types identified in (F) or (G) of this paragraph, regardless of the size of their assets, except a trust that includes as participants self-directed individual retirement accounts or similar self-directed plans;
    9. an organization described in 26 U.S.C. 501(c)(3) (Internal Revenue Code), corporation, Massachusetts trust or similar business trust, limited liability company, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $10,000,000;
    10. a small business investment company licensed by the United States Small Business Administration under 15 U.S.C. 681(c) (Small Business Investment Act of 1958) with total assets in excess of $10,000,000;
    11. a private business development company as defined in 15 U.S.C. 80b-2(a)(22) (Investment Advisers Act of 1940) with total assets in excess of $10,000,000;
    12. a federal covered investment adviser acting for its own account;
    13. a qualified institutional buyer, as defined in 17 C.F.R. 230.144A, other than 17 C.F.R. 230.144A(a)(1)(i)(H), adopted under 15 U.S.C. 77a — 77aa (Securities Act of 1933);
    14. a major United States institutional investor, as defined in 17 C.F.R. 240.15a-6(b)(4)(i), adopted under 15 U.S.C. 78a — 78pp (Securities Exchange Act of 1934);
    15. any other person, other than an individual, of institutional character with total assets in excess of $10,000,000 not organized for the specific purpose of evading this chapter; or
    16. any other person specified by regulation adopted or order issued under this chapter;
  15. “insurance company” means a company organized as an insurance company whose primary business is writing insurance or reinsuring risks underwritten by insurance companies and that is subject to supervision by the insurance commissioner or a similar official or agency of a state;
  16. “insured” means insured as to payment of all principal and all interest;
  17. “international banking institution” means an international financial institution of which the United States is a member and whose securities are exempt from registration under 15 U.S.C. 77a — 77aa (Securities Act of 1933);
  18. “investment adviser” means a person that, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or the advisability of investing in, purchasing, or selling securities or that, for compensation and as a part of a regular business, issues or produces analyses or reports concerning securities; “investment adviser” includes a financial planner or other person that, as an integral component of other financially related services, provides investment advice to others for compensation as part of a business or that holds itself out as providing investment advice to others for compensation; “investment adviser” does not include
    1. an investment adviser representative;
    2. a lawyer, accountant, engineer, or teacher whose performance of investment advice is solely incidental to the practice of the person’s profession;
    3. a broker-dealer or its agents whose performance of investment advice is solely incidental to the conduct of business as a broker-dealer and that does not receive special compensation for the investment advice;
    4. a publisher of a bona fide newspaper, news magazine, or business or financial publication of general and regular circulation;
    5. a federal covered investment adviser;
    6. a bank, a trust company organized or chartered under the laws of this state, or a savings institution;
    7. any other person that is excluded by 15 U.S.C. 80b-1 — 80b- 21 (Investment Advisers Act of 1940) from the definition of investment adviser; or
    8. any other person excluded by a regulation adopted or order issued under this chapter;
  19. “investment adviser representative” means an individual employed by or associated with an investment adviser or federal covered investment adviser and who makes any recommendations or otherwise gives investment advice regarding securities, manages accounts or portfolios of clients, determines which recommendation or advice regarding securities should be given, provides investment advice or offers to provide investment advice, receives compensation to solicit, offer, or negotiate for the sale of or for selling investment advice, or supervises employees who perform any of the foregoing; “investment adviser representative” does not include an individual who
    1. performs only clerical or ministerial acts;
    2. is an agent whose performance of investment advice is solely incidental to the individual’s acting as an agent and who does not receive special compensation for investment advisory services;
    3. is employed by or associated with a federal covered investment adviser, unless the individual has a place of business in this state, as that term is defined by rule adopted under 15 U.S.C. 80b-3a (Investment Advisers Act of 1940) and is
      1. an investment adviser representative, as that term is defined by rule adopted under 15 U.S.C. 80b-3a (Investment Advisers Act of 1940); or
      2. not a supervised person, as that term is defined in 15 U.S.C. 80b-2(a)(25) (Investment Advisers Act of 1940); or
    4. is excluded by a regulation adopted or order issued under this chapter;
  20. “issuer” means a person that issues or proposes to issue a security, subject to the following:
    1. the issuer of a voting trust certificate, collateral trust certificate, certificate of deposit for a security, or share in an investment company without a board of directors or individuals performing similar functions is the person performing the acts and assuming the duties of depositor or manager under the trust or other agreement or instrument under which the security is issued;
    2. the issuer of an equipment trust certificate or similar security serving the same purpose is the person by which the property is or will be used or to which the property or equipment is or will be leased or conditionally sold or that is otherwise contractually responsible for ensuring payment of the certificate;
    3. the issuer of a fractional undivided interest in an oil, gas, or other mineral lease or in payments out of production under a lease, right, or royalty is the owner of an interest in the lease or in payments out of production under a lease, right, or royalty, whether whole or fractional, that creates fractional interests for the purpose of sale;
  21. “nonissuer transaction” or “nonissuer distribution” means a transaction or distribution not directly or indirectly for the benefit of the issuer;
  22. “offer to purchase” includes an attempt or offer to obtain, or solicitation of an offer to sell, a security or interest in a security for value; “offer to purchase” does not include a tender offer that is subject to 15 U.S.C. 78n(d) (Securities Exchange Act of 1934);
  23. “older person” means a natural person who is 60 years of age or older;
  24. “person” means an individual, a corporation, a partnership, a limited liability company, a limited partnership, a limited liability partnership, an association, a joint-stock company, a trust in which the interests of the beneficiaries are evidenced by a security, an unincorporated organization, a government, or a political subdivision of a government;
  25. “place of business” of a broker-dealer, an investment adviser, or a federal covered investment adviser means
    1. an office at which the broker-dealer, investment adviser, or federal covered investment adviser regularly provides brokerage or investment advice or solicits, meets with, or otherwise communicates with customers or clients; or
    2. any other location that is held out to the general public as a location at which the broker-dealer, investment adviser, or federal covered investment adviser provides brokerage or investment advice or solicits, meets with, or otherwise communicates with customers or clients;
  26. “price amendment” means the amendment to a registration statement filed under 15 U.S.C. 77a — 77aa (Securities Act of 1933) or, if an amendment is not filed, the prospectus or prospectus supplement filed under 15 U.S.C. 77a — 77aa (Securities Act of 1933) that includes a statement of the offering price, underwriting and selling discounts or commissions, amount of proceeds, conversion rates, call prices, and other matters dependent on the offering price;
  27. “principal place of business” of a broker-dealer or an investment adviser means the executive office of the broker-dealer or investment adviser from which the officers, partners, or managers of the broker-dealer or investment adviser direct, control, and coordinate the activities of the broker-dealer or investment adviser;
  28. “record,” except in the phrases “of record,” “official record,” and “public 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;
  29. “sale” includes every contract of sale, contract to sell, or disposition of a security or interest in a security for value, and “offer to sell” includes every attempt or offer to dispose of, or solicitation of an offer to purchase, a security or interest in a security for value; both terms include
    1. a security given or delivered with, or as a bonus because of, a purchase of securities or any other thing constituting part of the subject of the purchase and having been offered and sold for value;
    2. a gift of assessable stock involving an offer and sale; and
    3. a sale or offer of a warrant or right to purchase or subscribe to another security of the same or another issuer and a sale or offer of a security that gives the holder a present or future right or privilege to convert the security into another security of the same or another issuer, including an offer of the other security;
  30. “Securities and Exchange Commission” means the United States Securities and Exchange Commission;
  31. “securities business” means a business that provides the services provided by
    1. investment advisers, federal covered investment advisers, or investment adviser representatives; or
    2. broker-dealers, issuers, or agents of broker-dealers or issuers;
  32. “security” means a note; stock; treasury stock; security future; bond; debenture; evidence of indebtedness; certificate of interest or participation in a profit-sharing agreement; collateral trust certificate; preorganization certificate or subscription; transferable share; investment contract; voting trust certificate; certificate of deposit for a security; viatical settlement; fractional undivided interest in oil, gas, or other mineral rights; put, call, straddle, option, or privilege on a security, certificate of deposit, or group or index of securities, including an interest in or based on the value of a put, call, straddle, option, or privilege on a security, certificate of deposit, or group or index of securities; put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency; or, in general, an interest or instrument commonly known as a “security”; or a certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase any of the foregoing; “security”
    1. includes
      1. both a certificated and an uncertificated security;
      2. an investment in a common enterprise with the expectation of profits to be derived primarily from the efforts of a person other than the investor; in this sub-subparagraph, “common enterprise” means an enterprise in which the fortunes of the investor are interwoven with those of the person offering the investment, a third party, or other investors;
      3. as an investment contract, among other contracts, an interest in a limited partnership and a limited liability company, and an investment in a viatical settlement or similar agreement; and
      4. a viatical settlement interest;
    2. does not include
      1. a participation agreement entered under AS 14.40.802 or an insurance or endowment policy subject to AS 21;
      2. an interest in a contributory or noncontributory pension or welfare plan subject to 29 U.S.C. 1001 — 1461 (Employee Retirement Income Security Act of 1974);
  33. “self-regulatory organization” means a national securities exchange registered under 15 U.S.C. 78a — 78pp (Securities Exchange Act of 1934), a national securities association of broker-dealers registered under 15 U.S.C. 78a — 78pp (Securities Exchange Act of 1934), a clearing agency registered under 15 U.S.C. 78a — 78pp (Securities Exchange Act of 1934), or the Municipal Securities Rulemaking Board established under 15 U.S.C. 78o-4 (Securities Exchange Act of 1934);
  34. “sign” means, with present intent to authenticate or adopt a record,
    1. to execute or adopt a tangible symbol; or
    2. to attach or logically associate with the record an electronic symbol, sound, or process;
  35. “state” means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States;
  36. “vulnerable adult” has the meaning given in AS 47.24.900 .

History. (§ 25 ch 65 SLA 2018)

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Sec. 45.56.995. Short title.

This chapter may be cited as the Alaska Securities Act.

History. (§ 25 ch 65 SLA 2018)

Effective dates. —

Section 36, ch. 65, SLA 2018 makes this section effective January 1, 2019.

Chapter 57. Takeover Bid Disclosure Act.

Revisor’s notes. —

The United States Supreme Court has held in Edgar v. MITE Corp., 457 U.S. 624, 102 S. Ct. 2629, 73 L. Ed. 2d 269 (1982), that an Illinois law similar to AS 45.57 is unconstitutional.

Sec. 45.57.010. Provisions of takeover bids.

The following provisions apply to every takeover bid:

  1. the period of time within which securities may be tendered by an offeree under a takeover bid shall not be less than 21 days nor more than 35 days from the date copies of the takeover bid are first published or sent or given to offerees;
  2. securities deposited under a takeover bid may be withdrawn by an offeree or the attorney-in-fact of the offeree by demand in writing on the offeror or the depository at any time within 21 days from the date copies of the takeover bid are first published or sent or given to offerees;
  3. when a takeover bid is made for less than all the shares or other units of a class and when a greater number of shares or other units is deposited under it than the offeror is bound or willing to take up and pay for, the shares or other units taken up by the offeror shall be taken up as nearly as may be pro rata, disregarding fractions, according to the number of shares or other units deposited;
  4. when an offeror varies the terms of a takeover bid before the expiration of it by increasing the consideration offered, the offeror shall pay the increased consideration to each offeree whose securities are taken up even if they have been taken up and paid for before the variation of the takeover bid;
  5. when a takeover bid is sent by mail to offerees, it shall be accompanied by a copy of the statement filed with the department under AS 45.57.020 .

History. (§ 1 ch 129 SLA 1976)

Sec. 45.57.020. Disclosure.

  1. An offeror may not make a takeover bid unless at least 20 days before the bid the offeror files with the department and with the registered agent of the offeree company a statement containing all the information required by (c) of this section and either
    1. within 10 days following the filing no hearing has been ordered by the department or requested by the offeree company; or
    2. a hearing has been ordered within that time and, after the hearing conducted by the office of administrative hearings (AS 44.64.010 ), the department has decided that the offeror proposed to make fair, full, and effective disclosure to offerees of all information material to a decision to accept or reject the offer.
  2. A hearing shall begin within 20 days of the date of filing of the statement, and adjudication shall be made within 30 days of the filing unless extended by the administrative law judge for the convenience of the parties or protection of the offerees.
  3. The statement to be filed with the department under (a) of this section shall include the following information and the additional information that the department may require as necessary in the public interest or for the protection of offerees:
    1. the name, address, and business experience of the offeror and each associate of the offeror;
    2. the terms and conditions of the takeover bid, which shall include the applicable provisions of AS 45.57.010 ;
    3. the source and amount of the funds or other consideration used or to be used in making the takeover bid, and if any part of those funds or consideration is represented or is to be represented by funds or other consideration borrowed or otherwise obtained for the purpose of making the bid, a description of the transaction and the names of the parties to it, except that if a source of funds is a loan made in the ordinary course of business by a bank or financial institution customarily engaged in the business of making loans, it will be sufficient to so state;
    4. plans or proposals that the offeror may have to liquidate the offeree company, to sell its assets to or merge it with any other person, or to make any other material change in its business or corporate structure;
    5. the number of shares or other units of securities of each class presently owned by the offeror and each associate of the offeror;
    6. information as to any contracts, arrangements, or understandings with a person with respect to securities of the offeree company, including but not limited to transfer of any of the securities, joint ventures, loan or option arrangements, puts or calls, guaranties of loans, guaranties against loss or guaranties of profits, division of losses or profits, or the giving or withholding of proxies, naming the persons with whom those contracts, arrangements, or understandings have been entered into, and giving the details of them;
    7. complete information on the organization and operations of the offeror, including without limitation the year of organization, form of organization, jurisdiction in which it is organized, a description of each class of the offeror’s capital stock and of its long-term debt, financial statements for the current period and for the three most recent annual accounting periods, a brief description of the location and general character of the principal physical properties of the offeror and its subsidiaries, a description of pending legal proceedings other than routine litigation to which the offeror or any of its subsidiaries is a party or of which any of their property is the subject, a brief description of the business done and projected by the offeror and its subsidiaries and the general development of that business over the past five years, the names of all directors and executive officers together with biographical summaries of each for the preceding five years to date, the approximate amount of any material interest, direct or indirect, of any of the directors or officers in a material transaction during the past three years or in a proposed material transaction to which the offeror or any of its subsidiaries was or is to be a party, and complete information concerning all inducements to officers and directors of the offeree company which are not made available to all security holders.
  4. The department may within 10 days of the filing order a hearing to determine whether fair, full, and effective disclosure is proposed, if in the opinion of the department cause for a hearing exists. The offeree company may within 10 days of the filing request a hearing and the department shall upon receipt of the request order a hearing.
  5. All written soliciting material used by the offeror in connection with the takeover bid shall be filed with the department and the registered agent of the offeree company not later than three days before the time copies of the material are first published or sent or given to offerees.
  6. If, under an arrangement or understanding with the offeror, any persons are to be elected or designated as directors of the offeree company, otherwise than at a meeting of security holders, and the persons so elected or designated will constitute a majority of the directors of the offeree company, then, before the time that person takes office as a director, the offeror shall file with the department, and transmit to all holders of record of securities of the offeree company who would be entitled to vote at a meeting for election of directors, information substantially equivalent to the information which would be required by sec. 14(a) or 14(c) of the Securities Exchange Act of 1934 to be transmitted if the person was a nominee for election as a director at a meeting of the security holders.

History. (§ 1 ch 129 SLA 1976; am §§ 87, 88 ch 163 SLA 2004)

Sec. 45.57.030. Recommendations to accept or reject.

A written solicitation or recommendation to offerees, other than by the offeror, to accept or reject a takeover bid shall be filed with the department not later than the time copies of the solicitation or recommendation are first published or sent or given to offerees.

History. (§ 1 ch 129 SLA 1976)

Sec. 45.57.040. Deceptive practices.

It is unlawful for a person to make or omit or cause to be made or omitted, in a document filed or in a proceeding under this chapter, a statement which is, at the time and in the light of the circumstances under which it is made, false or misleading in a material respect. It is unlawful for a person to engage in a fraudulent, deceptive, or manipulative act or practice, in connection with a takeover bid, or a solicitation of offerees in opposition to or in favor of a takeover bid.

History. (§ 1 ch 129 SLA 1976)

Sec. 45.57.050. Investigations and subpoenas.

  1. The department in its discretion may
    1. make public or private investigations inside or outside this state as it considers necessary to determine whether a person has violated or is about to violate a provision of this chapter or an order under this chapter;
    2. require or permit a person to file a statement in writing, under oath or otherwise as the department determines, as to all the facts and circumstances concerning the matter to be investigated; and
    3. publish information concerning a violation of this chapter or an order under this chapter.
  2. For the purpose of an investigation or proceeding under this chapter, the department or an officer designated by it may administer oaths and affirmations, subpoena witnesses, compel their attendance, take evidence, and require the production of books, papers, correspondence, memoranda, agreements, or other documents or records which the department considers relevant or material to the inquiry.

History. (§ 1 ch 129 SLA 1976)

Sec. 45.57.060. Injunctions.

When it appears to the department that a person has engaged or is about to engage in an act or practice in violation of a provision of this chapter or an order under this chapter, it may bring an action in the superior court to enjoin the acts or practices and to enforce compliance with this chapter or order under this chapter. The court may not require the department to post a bond.

History. (§ 1 ch 129 SLA 1976)

Sec. 45.57.070. Criminal penalties.

A person who wilfully violates a provision of this chapter, upon conviction, is punishable by a fine of not more than $5,000, or by imprisonment for not more than three years, or by both. However, a person may not be imprisoned for the violation of an order if the person proves that the person had no knowledge of the order. An indictment or information may not be returned under this chapter more than five years after the alleged violation.

History. (§ 1 ch 129 SLA 1976)

Sec. 45.57.080. Civil liabilities.

  1. An offeror who (1) makes a takeover bid which does not comply with the provisions of this chapter or (2) makes a takeover bid by means of a statement which is, at the time and in the light of the circumstances under which it is made, false or misleading in a material respect, and who does not sustain the burden of proof that the offeror did not know, and in the exercise of reasonable care could not have known, of the untruth or omission, is liable to any offeree whose shares are taken up under the takeover bid.  An offeree may bring civil action (1) to recover the shares, together with all dividends received, costs and reasonable attorney fees, upon the tender of the consideration received from the offeror, or (2) for the substantial equivalent in damages if the offeror no longer owns the shares.
  2. Every person who materially participates or aids in a takeover bid made by an offeror liable under (a) of this section, or who directly or indirectly controls an offeror who is liable, is also liable jointly and severally with and to the same extent as the offeror unless the person who so participates, aids, or controls, sustains the burden of proof that the person did not know, and in the exercise of reasonable care could not have known, of the existence of the facts by reason of which the liability is alleged to exist. There shall be contribution as in cases of contract among the several persons liable.
  3. A tender specified in this section may be made at any time before entry of judgment.
  4. A person may not bring action under this section unless brought within two years after the transaction upon which it is based.  If a person liable under this section makes a written offer, before suit is brought, to return the shares taken up under the takeover bid, together with all dividends received, upon the tender of the consideration received from the offeror, or to pay damages if the offeror no longer owns the shares, a person may not maintain a suit under this section unless the person rejected the offer in writing within 30 days of its receipt.
  5. Any condition, stipulation, or provision binding an offeree to waive compliance with a provision of this chapter or a regulation adopted under it is void.
  6. The rights and remedies provided by this chapter shall be in addition to any and all other rights and remedies that may exist at law or in equity.

History. (§ 1 ch 129 SLA 1976)

Sec. 45.57.090. Consent to service of process.

A nonresident offeror, except a foreign corporation which has complied with AS 10.06.705 10.06.788 , who makes a takeover bid affecting an offeree company is considered to have appointed the commissioner of commerce, community, and economic development as the offeror’s agent upon whom may be served, in any matter arising under this chapter, any process, notice, order, or demand except one issued by the department. Service may be made on the commissioner or any of the commissioner’s staff at the commissioner’s office. The commissioner shall send it by registered or certified mail addressed to the offeror at the latest address on file and keep a record of it. A process, notice, order, or demand issued by the department shall be served by being mailed by the commissioner or any of the commissioner’s staff by registered or certified mail addressed to the offeror at the latest address on file.

History. (§ 1 ch 129 SLA 1976; am § 61 ch 56 SLA 2005)

Revisor’s notes. —

In 1999, in this section, “commissioner of commerce and economic development” was changed to “commissioner of community and economic development” in accordance with § 88, ch. 58, SLA 1999.

In 2004, in this section, “commissioner of community and economic development” was changed to “commissioner of commerce, community, and economic development”, in accordance with § 3, ch. 47, SLA 2004.

Sec. 45.57.100. Regulations.

The department may adopt regulations and forms that are necessary or desirable to carry out the provisions of this chapter.

History. (§ 1 ch 129 SLA 1976)

Sec. 45.57.110. Definitions.

In this chapter, unless the context requires otherwise,

  1. “associate of the offeror” means
    1. a corporation or other organization of which the offeror is an officer, director or partner, or is, directly or indirectly, the beneficial owner of 10 percent or more of any class of equity securities;
    2. a person who is, directly or indirectly, the beneficial owner of 10 percent or more of any class of equity securities of the offeror;
    3. a trust or other estate in which the offeror has a substantial beneficial interest or as to which the offeror serves as trustee or in a similar fiduciary capacity;
    4. a relative or spouse of the offeror or a relative of the spouse, who has the same home as the offeror;
    5. a person directly or indirectly controlling, controlled by, or under common control with, the offeror;
  2. “department” means the Department of Commerce, Community, and Economic Development;
  3. “exempt offer” means, with respect to any class of equity securities of the offeree company,
    1. an isolated offer to purchase equity securities from individual shareholders and not made to shareholders generally;
    2. an offer made by an issuer to purchase its own equity securities or equity securities of a subsidiary at least two-thirds of the voting stock of which is owned beneficially by the issuer;
    3. an offer to purchase equity securities to be effected by a registered broker-dealer on a stock exchange or in the over-the-counter market if the broker performs only the customary broker’s function, and receives no more than the customary broker’s commissions, and neither the principal nor the broker solicits or arranges for the solicitation of orders to sell equity securities of the offeree company;
    4. an offer to purchase equity securities made to all holders of the securities if the number of such holders does not exceed 100 at the time of the offer;
    5. an offer which the board of directors of the offeree company recommends to the security holders of the company if the terms of the offer, including any inducements to officers or directors which are not available to all security holders, have been furnished to security holders;
  4. “offer” means an offer made by any person directly or through an agent by advertisement or any other written or oral communication to offerees to purchase the number of shares or other units of any class of equity security of the offeree company that, together with the offeror’s presently owned shares, will in the aggregate exceed five percent of the outstanding shares of that class;
  5. “offeree” means a person, whether a security holder of record or a beneficial owner, to whom a takeover bid is made;
  6. “offeree company” means a corporation incorporated under the laws of Alaska or a corporation which has its principal office and substantial assets located in Alaska, whose equity securities are the subject of a takeover bid;
  7. “offeror” means a person who makes a takeover bid, and includes two or more persons
    1. whose takeover bids are made jointly or in concert, or
    2. who intend to exercise jointly or in concert any voting rights attaching to the equity securities for which a takeover bid is made;
  8. “offeror’s presently owned equity securities”means, with respect to any class of securities of an offeree company, the aggregate number of shares or other units which, on the date of a takeover bid, are beneficially owned or subject to a right of acquisition directly or indirectly by the offeror or an associate of the offeror;
  9. “Securities Exchange Act of 1934” means the federal statutes of that name as in effect or subsequently amended;
  10. “takeover bid” means an offer, other than an exempt offer.

History. (§ 1 ch 129 SLA 1976)

Revisor’s notes. —

Reorganized in 1986 to alphabetize the defined terms.

In 1999, in this section, “Department of Commerce and Economic Development” was changed to “Department of Community and Economic Development” in accordance with § 88, ch. 58, SLA 1999.

In 2004, in this section, “Department of Community and Economic Development” was changed to “Department of Commerce, Community, and Economic Development”, in accordance with § 3, ch. 47, SLA 2004.

Sec. 45.57.120. Short title.

This chapter may be cited as the Takeover Bid Disclosure Act.

History. (§ 1 ch 129 SLA 1976)

Chapter 60. Alaska Uniform Gifts to Minors Act.

[Repealed, § 6 ch 11 SLA 1990; For current law, see AS 13.46.]

Chapter 63. Telephonic Solicitations.

Cross references. —

For violation of AS 45.63 as an unlawful trade practice, see AS 45.50.471(b) .

Administrative Code. —

For telephonic sellers, see 9 AAC 14.

Sec. 45.63.010. Registration.

  1. A person may not sell or attempt to sell property or services by telephonic means if the person makes substantially the same offer on substantially the same terms to two or more persons, unless the telephone seller is registered with the Department of Law at least 30 days before the solicitation campaign.
  2. To register under (a) of this section, a person shall file with the department
    1. a notice of intent to engage in a solicitation campaign; a separate notice of intent shall be filed for each solicitation campaign;
    2. an irrevocable consent appointing the department the person’s agent for the receipt of service of process in a court action or other proceeding against the person, or the successor in interest of the person, for a violation of this chapter; and
    3. a signed statement that the person has read and will comply with this chapter and the regulations adopted under this chapter.
  3. Registration under (b) of this section is not complete until the telephone seller receives an acknowledgement from the department that the seller has complied with (b) of this section.
  4. The notice of intent must be on a form or in a format provided and established by the department by regulation. The department may require the notice of intent to be submitted under oath or affirmation or with notice that false statements made are punishable as unsworn falsification in the second degree under AS 11.56.210 . The notice of intent must include detailed information about the nature of the solicitation campaign and the identity and business practices of the telephone seller, including information on the employees, agents, and officers affiliated with the telephone seller. The notice of intent must disclose criminal convictions, civil judgments, orders, consent decrees, or administrative determinations involving allegations of unfair or deceptive business practices by the telephone seller.
  5. A person may not provide false information in a notice of intent.

History. (§ 1 ch 60 SLA 1993; am §§ 10 — 12 ch 55 SLA 2004; am § 29 ch 42 SLA 2006)

Administrative Code. —

For telephonic sellers, see 9 AAC 14.

Editor’s notes. —

Section 36(a)(1), ch. 55, SLA 2004 sets out the applicability of the 2004 addition of subsection (d) of this section as applicable to filings with the Department of Law on and after July 1, 2004. See § 36(a)(1), ch. 55, SLA 2004, in the 2004 Temporary and Special Acts.

Notes to Decisions

Applied in

Distributel, Inc. v. State, 933 P.2d 1137 (Alaska 1997).

Sec. 45.63.015. Registration fees.

Each separate registration filed under AS 45.63.010(b) must be accompanied by a registration fee. The department shall establish the amount of the fee by regulation. The fees required by this section are nonrefundable and shall be deposited in the general fund.

History. (§ 13 ch 55 SLA 2004)

Administrative Code. —

For telephonic sellers, see 9 AAC 14.

Editor’s notes. —

Section 36(a)(1), ch. 55, SLA 2004 sets out the applicability of the 2004 addition of this section as applicable to filings with the Department of Law on and after July 1, 2004. See § 36(a)(1), ch. 55, SLA 2004, in the 2004 Temporary and Special Acts.

Sec. 45.63.020. Written contract required.

Until a telephone seller receives from a buyer a signed, written contract for the purchase, the telephone seller may not solicit payment for the purchase, charge a credit card account for the purchase, negotiate a check or other commercial instrument intended for payment of the purchase, or accept a cash payment for the purchase. The written contract must notify the buyer of the rights of the buyer under AS 45.63.030(a) and disclose the information required by the department by regulation.

History. (§ 1 ch 60 SLA 1993; am § 14 ch 55 SLA 2004)

Administrative Code. —

For telephonic sellers, see 9 AAC 14.

Sec. 45.63.030. Cancellation or replacement.

  1. Notwithstanding AS 45.01 — AS 45.08, AS 45.12, AS 45.14, and AS 45.29 (Uniform Commercial Code), a telephone seller shall give the buyer a refund, credit, or replacement, at the option of the buyer, if
    1. the property or services purchased are defective, not as represented, or not received as promised by the seller;
    2. within seven days after receiving the purchased property, the buyer returns the purchased property and makes a written request for the refund, credit, or replacement; or
    3. within seven days after paying for the purchased services and before the services are provided, the buyer makes a written request for the refund or credit.
  2. A return or request is timely under (a) of this section if the return or request is made in person within the seven days or if the return or request is mailed, properly addressed and postmarked, postage prepaid, within the seven days.
  3. Notwithstanding AS 45.01 — AS 45.08, AS 45.12, AS 45.14, and AS 45.29 (Uniform Commercial Code), a purchase of property from a telephone seller becomes final seven days after receipt of the property, unless the buyer requests a refund, credit, or replacement under (a) of this section, or the telephone seller fails to obtain the contract required by AS 45.63.020 .
  4. A purchase of services from a telephone seller becomes final seven days after receipt of the contract required by AS 45.63.020 , unless the buyer requests a refund or credit under (a) of this section.

History. (§ 1 ch 60 SLA 1993; am §§ 15 — 17 ch 55 SLA 2004)

Revisor’s notes. —

In 2000, “AS 45.01 — AS 45.08, AS 45.12, AS 45.14, and AS 45.29” was substituted for “AS 45.01 — AS 45.09, AS 45.12, and AS 45.14” in accordance with § 35, ch. 113, SLA 2000.

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. 45.63.040. Prohibited representations.

  1. Unless the telephone seller is asked for the information by the buyer, the seller may not state or imply that the seller has a license, consent, or other form of permission from the state.
  2. A telephone seller may not state or imply that
    1. the seller is complying with state law; or
    2. the seller’s compliance with the laws of this state or a municipality constitutes approval or endorsement by the state or municipality.

History. (§ 1 ch 60 SLA 1993; am § 18 ch 55 SLA 2004)

Sec. 45.63.045. Required representations; prohibitions.

  1. A telephone seller shall
    1. within the first 15 seconds of a call and in a clear and conspicuous manner, disclose the registered seller’s name and telephone number, whom the registered seller represents, and that the call is a sales call; and
    2. repeat the information at any time during the conversation if requested by a person at the number called.
  2. A telephone seller must terminate the telephone solicitation and promptly disconnect the telephone line if the person receiving the call objects to the solicitation or indicates that the person is not interested in the product or service that is the subject of the solicitation.
  3. A telephone seller who makes a telephonic solicitation may not cause a telephone to ring repeatedly or continuously with the intent to annoy, abuse, or harass a person at the telephone number called or repeatedly engage a person in a telephone conversation.

History. (§ 19 ch 55 SLA 2004)

Sec. 45.63.050. Waiver prohibited and void.

A telephone seller may not request or obtain from a buyer a waiver of the rights of the buyer under this chapter. A waiver of the rights of a buyer under this chapter is void.

History. (§ 1 ch 60 SLA 1993; am § 20 ch 55 SLA 2004)

Sec. 45.63.060. Criminal penalties.

  1. A person who sells or attempts to sell property or services by telephonic means by making substantially the same offer on substantially the same terms to two or more persons without complying with the registration requirements of AS 45.63.010 , or who solicits, or receives, payment for a purchase before receiving the written contract required by AS 45.63.020 is guilty of a class C felony.
  2. A person who violates AS 45.63.030 45.63.050 is guilty of a class A misdemeanor.

History. (§ 1 ch 60 SLA 1993)

Cross references. —

For penalties, see AS 12.55.125 for imprisonment for felonies, AS 12.55.135 for imprisonment for misdemeanors, and AS 12.55.035 for fines.

Sec. 45.63.070. Remedies not exclusive.

The remedies in this chapter are in addition to other remedies available to a buyer or the department.

History. (§ 1 ch 60 SLA 1993)

Sec. 45.63.080. Exemptions.

  1. AS 45.63.010 , 45.63.015 , 45.63.020 , and AS 45.63.030(c) and (d) do not apply to a sale or attempted sale
    1. of a security regulated under AS 45.56 or a security that is exempted by AS 45.56.110 from regulation under AS 45.56;
    2. by a person registered with the United States Securities and Exchange Commission when acting within the scope of the person’s Securities and Exchange Commission license;
    3. by an issuer, or a subsidiary of an issuer, of a class of securities that is
      1. subject to 15 U.S.C. 78a — 78pp (Securities Exchange Act of 1934); and
      2. either registered under 15 U.S.C. 78a — 78pp (Securities Exchange Act of 1934) or exempt from registration under 15 U.S.C. 78l(g)(2)(A) — (C) or (E) — (H);
    4. by a real estate broker, associate real estate broker, or real estate salesperson licensed under AS 08.88 and acting in a capacity covered by the license;
    5. by a person who has a certificate of registration under AS 08.18 to operate as a contractor and is acting in a capacity covered by the certificate of registration;
    6. by an embalmer or funeral director licensed under AS 08.42 and acting in a capacity covered by the license;
    7. by an insurance agent, general agent, broker, solicitor, or adjuster licensed under AS 21.27 and acting in a capacity covered by the license;
    8. by a person who is primarily soliciting the sale of a subscription to, or advertising in, a newspaper of general circulation;
    9. by a charitable organization or paid solicitor if the organization or solicitor is registered to make charitable solicitations under AS 45.68 and is acting in a capacity that is covered by the registration;
    10. by a person who is primarily soliciting the sale of a sound recording or book
      1. if the person
        1. has no minimum purchase requirements;
        2. provides written notice of the buyer’s right to cancel at any time; and
        3. allows the buyer to return the sound recording or book and obtain a full refund; or
      2. through a membership in a book or record club
        1. where the club provides the buyer with a form that the buyer may use to instruct the club not to ship the offered merchandise; and
        2. that is regulated by the Federal Trade Commission as a negative option plan under 16 C.F.R. Part 425;
    11. by a publisher, or a publisher’s agent operating under a written agreement between a publisher and the agent, who is soliciting the sale of a publisher’s magazine if
      1. the buyer has the right to review the magazine and cancel the subscription for the magazine within seven days after receipt of the magazine or at the time the invoice is received by the buyer, whichever is later; a cancellation request is timely if the request is mailed, properly addressed and postmarked, postage prepaid, within seven days after receipt of the magazine;
      2. the right of cancellation and refund is fully disclosed in writing to the buyer before or at the time the initial invoice is received by the buyer;
    12. of services provided by a cable television system operating under a franchise issued by a municipality;
    13. by a person who is soliciting for a business, or for an affiliate of a business, that is regulated by the Regulatory Commission of Alaska;
    14. by a person whose solicitation is solely for telephone answering services provided by the person or the person’s employer;
    15. of property from a mail order catalog that is published on a regular, periodic basis and that describes or pictures the items for sale and prominently provides the specific price of each item;
    16. by a supervised financial institution or the parent, subsidiary, or affiliate of a supervised financial institution; in this paragraph, “supervised financial institution” means a commercial bank, savings bank, mutual savings bank, trust company, savings and loan association, credit union, industrial loan company, personal property broker, consumer finance lender, commercial finance lender, or other financial institution if the financial institution is subject to regulation by this state or the United States;
    17. by an insurer or the parent, subsidiary, or affiliate of an insurer;
    18. by a person who solicits a sale by a contact by telephonic means without intending to complete the sales presentation during the contact, who does not complete the sales presentation during the contact, and who only completes the sales presentation at a later meeting in person, unless at the later meeting the solicitor attempts to collect payment for property or services delivered before the later meeting;
    19. of an item of personal property, including a food product, that is made by hand by an individual, if the sale or attempted sale of the item is made by the individual who made the item; in this paragraph, “made by hand” includes the use of ordinary household devices if the majority of the value of the item is added by the labor of the individual.
  2. The written disclosure required by (a)(11)(B) of this section does not apply to a sale of a magazine subscription by a publisher or a publisher’s agent operating under a written agreement between a publisher and the agent
    1. where a telephone call is made to a customer to solicit a subscription renewal; or
    2. when a telephone call is initiated by the buyer, payment is made by credit card, and a telephone number to cancel the subscription is on the credit card statement description line for that charge.

History. (§ 1 ch 60 SLA 1993; am §§ 21, 22 ch 55 SLA 2004; am § 52 ch 22 SLA 2015; am § 26 ch 65 SLA 2018)

Revisor’s notes. —

The reference “salesperson” was substituted for “salesman” in paragraph (a)(4) in 1998 pursuant to § 58, ch. 45, SLA 1998.

In 1999, in paragraph (a)(13) [formerly (a)(12)] “Regulatory Commission of Alaska” was substituted for “Alaska Public Utilities Commission” in accordance with § 30(a), ch. 25, SLA 1999.

In 2018, in (a) of this section, “AS 45.56.110 ” was substituted for “AS 45.56.205” to reflect the 2018 renumbering of that section.

Administrative Code. —

For telephonic sellers, see 9 AAC 14.

Effect of amendments. —

The 2015 amendment, effective July 1, 2015, in (a)(10)(B)(ii), substituted “16 C.F.R. Part 425” for “16 C.F.R. 425”.

The 2018 amendment, effective January 1, 2019, in (a)(1), twice substituted “AS 45.56” for “AS 45.55” and substituted “AS 45.56.110 ” for “AS 45.55.900 ”, in (a)(3)(A) and (B), substituted “15 U.S.C. 78a – 78pp” for “15 U.S.C. 78a – 78 lll ”.

Notes to Decisions

Catalog exemption. —

The exemption for sales from a mail order catalog, paragraph (15) (formerly (a)(14)) does not encompass sales initiated by a telephone call from a seller following the seller’s delivery of a mail order catalog to consumers. Distributel, Inc. v. State, 933 P.2d 1137 (Alaska), cert. denied, 522 U.S. 862, 118 S. Ct. 165, 139 L. Ed. 2d 109 (U.S. 1997).

Sec. 45.63.090. Regulations.

The department shall adopt regulations under AS 44.62 (Administrative Procedure Act) to implement this chapter.

History. (§ 1 ch 60 SLA 1993)

Administrative Code. —

For telephonic sellers, see 9 AAC 14.

Sec. 45.63.100. Definitions.

In this chapter,

  1. “buyer” means a person who buys from or is solicited by a seller by telephonic means;
  2. “department” means the Department of Law;
  3. “notice of intent” means the notice of intent required by AS 45.63.010 to engage in a solicitation campaign;
  4. “solicitation campaign” means a sale or attempt to sell property or services by telephonic means by making substantially the same offer on substantially the same terms to two or more persons;
  5. “telephone seller” means a person who is required to be registered under AS 45.63.010 ;
  6. “telephonic means” means a telephone or another method using telephone lines, and includes a facsimile machine and electronic communication between electronic computing devices; “telephonic means” includes a letter, postcard, notice, or other written communication advising, requesting, motivating, or otherwise encouraging a person to contact a seller by telephonic means.

History. (§ 1 ch 60 SLA 1993; am §§ 23, 24, 34 ch 55 SLA 2004)

Revisor’s notes. —

Reorganized in 2004 to alphabetize the defined terms.

Administrative Code. —

For telephonic sellers, see 9 AAC 14.

Chapter 65. Handicrafts and Works of Art.

Administrative Code. —

For silver hand and “Made in Alaska” programs, see 3 AAC 58.

Article 1. Handicrafts.

Sec. 45.65.010. Identification seals and emblems.

  1. An Alaska Native person who creates or crafts an original article of authentic Alaska Native art in the state may obtain an identification seal as specified in AS 45.65.030(a) to identify the article. The identification seal may be affixed only to original articles of authentic Alaska Native art created or crafted in the state.
  2. A person may use an emblem described under AS 45.65.030(c) to identify an article that is made in the state. The emblem may not be used to identify an article made outside the state.

History. (§ 1 ch 40 SLA 1961; am § 1 ch 153 SLA 1962; am § 1 ch 125 SLA 1978; am §§ 1, 2 ch 104 SLA 1992; am § 3 ch 16 SLA 2008)

Collateral references. —

74 Am. Jur. 2d Trademarks and Tradenames, § 39.

Sec. 45.65.020. Administration of chapter.

  1. The commissioner of commerce, community, and economic development is responsible for the administration of the provisions of AS 45.65.010 45.65.070 relating to the emblem that is authorized under AS 45.65.010 (b), including
    1. the supervision of the use of the emblem;
    2. subject to AS 45.65.030(c) , the design, issuance, and control of emblems;
    3. the issuance of permits to agents to issue permits to use the emblems; and
    4. the enforcement of AS 45.65.010 — 45.65.070 regarding the emblem authorized under AS 45.65.010(b) .
  2. The Alaska State Council on the Arts (AS 44.27.040 ) is responsible for the administration of the provisions of AS 45.65.010 45.65.070 relating to identification seals for authentic Alaska Native art, including
    1. subject to AS 45.65.030(a) , the design, method of affixing, preparation, issuance, and control of identification seals;
    2. the issuance of permits to use identification seals and the collection of the fees established under AS 45.65.040(c) ;
    3. the supervision of the use of identification seals; and
    4. the enforcement of AS 45.65.010 45.65.070 regarding identification seals.

History. (§ 2 ch 40 SLA 1961; am § 1 ch 83 SLA 1977; am § 2 ch 125 SLA 1978; am § 3 ch 104 SLA 1992; am E.O. No. 100, §§ 3, 4 (1998); am § 4 ch 16 SLA 2008)

Revisor’s notes. —

In 1999, in (a) of this section, “commissioner of commerce and economic development” was changed to “commissioner of community and economic development” in accordance with § 88, ch. 58, SLA 1999.

In 2004, in (a) of this section, “commissioner of community and economic development” was changed to “commissioner of commerce, community, and economic development”, in accordance with § 3, ch. 47, SLA 2004.

Administrative Code. —

For silver hand and “made in Alaska” programs, see 3 AAC 58.

Sec. 45.65.030. Design of identification seals and emblems.

  1. The official symbol for the identification seal is the silver hand symbol. It must bear the words: “Authentic Alaska Native Art from Alaska” and include space for the artist’s name and the place of origin of the article.
  2. [Repealed, § 5 ch 104 SLA 1992.]
  3. The official emblem for an article that is made in the state is a design approved by the commissioner under AS 45.65.020(a)(2) that depicts a mother bear with a cub and states the words “Made in Alaska.”

History. (§ 3 ch 40 SLA 1961; am § 2 ch 83 SLA 1977; am § 3 ch 125 SLA 1978; am §§ 4, 5, 11 ch 104 SLA 1992; am E.O. No. 100, § 5 (1998); am § 5 ch 16 SLA 2008)

Administrative Code. —

For silver hand and “made in Alaska” programs, see 3 AAC 58.

Sec. 45.65.040. Identification seal.

  1. The identification seal may only be used after receiving a permit from the council.
  2. [Repealed, § 14 ch 16 SLA 2008.]
  3. The council shall establish forms and fees for the applications and permits to be used or issued under this section, the period for which the permits are valid, and the procedures for renewing the permits.
  4. Before issuing a permit to a person under (a) of this section, the council shall determine that the person is eligible under AS 45.65.010(a) to obtain the identification seal and that the article for which the person is applying for the permit is eligible under AS 45.65.010(a) for the identification seal.
  5. A person may report alleged violations of AS 45.65.010 45.65.070 regarding identification seals to the council.

History. (§ 4 ch 40 SLA 1961; am § 2 ch 153 SLA 1962; am § 3 ch 83 SLA 1977; am § 4 ch 125 SLA 1978; am § 6 ch 104 SLA 1992; am E.O. No. 100, § 6 (1998); am §§ 6 — 8, 14 ch 16 SLA 2008)

Administrative Code. —

For silver hand and “made in Alaska” programs, see 3 AAC 58.

Sec. 45.65.045. Emblem and emblem agent permits.

  1. The emblem authorized under AS 45.65.010(b) may not be used without receiving a permit from the commissioner or from an agent who possesses a current permit under (b) of this section.
  2. A resident of the state may apply to the commissioner for a permit to act as an agent to issue permits to use the emblem. An agent may report alleged violations of AS 45.65.010 45.65.070 regarding emblems to the commissioner.
  3. The commissioner shall establish forms and fees for the applications and permits to be used or issued under this section, the period for which the permits are valid, and the procedures for renewing the permits.
  4. Before issuing a permit for an article under this section, the commissioner or the agent shall determine that the article is eligible for the emblem.

History. (§ 7 ch 104 SLA 1992; am E.O. No. 100, § 7 (1998))

Administrative Code. —

For silver hand and “made in Alaska” programs, see 3 AAC 58.

Sec. 45.65.050. Affixing seals to handicraft. [Repealed, § 11 ch 104 SLA 1992.]

Sec. 45.65.055. Prohibited conduct.

An individual may not

  1. affix or attach the identification seal to an article that is not an original article of authentic Alaska Native art created or crafted in the state;
  2. sell or offer for sale an article that has an identification seal affixed or attached but that is not an original article of authentic Alaska Native art created or crafted in the state; or
  3. alter, change, or counterfeit an identification seal.

History. (§ 9 ch 16 SLA 2008)

Sec. 45.65.060. Penalties.

  1. A person who knowingly violates AS 45.65.055 is guilty of a class B misdemeanor. In this subsection, “knowingly” has the meaning given in AS 11.81.900 .
  2. [Repealed, § 14 ch 16 SLA 2008.]
  3. A person who knowingly or wilfully alters, changes, or counterfeits an emblem is guilty of a class B misdemeanor.
  4. A person who knowingly or wilfully sells or offers for sale an article that is not made in the state but that bears the emblem is guilty of a class B misdemeanor.
  5. A person who knowingly or wilfully uses the emblem for an article that is not made in the state is guilty of a class B misdemeanor.
  6. [Repealed, § 14 ch 16 SLA 2008.]
  7. A person who has been issued a permit under AS 45.65.045 to issue permits to use the emblem, is guilty of a class B misdemeanor if the person knowingly or wilfully issues a permit for an article that is not made in the state.

History. (§ 7a — c ch 40 SLA 1961; am § 4 ch 153 SLA 1962; am § 5 ch 83 SLA 1977; am § 6 ch 125 SLA 1978; am §§ 8, 9 ch 104 SLA 1992; am §§ 10, 11, 14 ch 16 SLA 2008)

Cross references. —

For penalties for misdemeanors, see AS 12.55.035 and 12.55.135 .

Administrative Code. —

For silver hand and “made in Alaska” programs, see 3 AAC 58.

Sec. 45.65.070. Definitions.

In AS 45.65.010 45.65.070 , unless the context otherwise requires,

  1. “Alaska Native person” means an individual who is a state resident and who is an enrolled member of an Alaska tribe; in this paragraph, “state resident” means an individual who is physically present in the state with the intent to remain indefinitely in the state under the requirements of AS 01.10.055 , or, if the individual is not physically present in the state, intends to return to the state and remain indefinitely in the state under the requirements of AS 01.10.055 ;
  2. “Alaska tribe” means an organized group or community in Alaska that is an Indian tribe; in this paragraph, “Indian tribe” has the meaning given in 25 U.S.C. 450b(e) (Indian Self-Determination and Education Assistance Act);
  3. “authentic Alaska Native art ” means a work of art that is created or crafted in the state by an Alaska Native person;
  4. “commissioner” means the commissioner of commerce, community, and economic development;
  5. “council” means the Alaska State Council on the Arts (AS 44.27.040 );
  6. “emblem” means the emblem that is authorized under AS 45.65.010(b) ;
  7. “identification seal” means the seal authorized by AS 45.65.010(a) ;
  8. “original” means new, unique, not a reproduction, and created or crafted by one person without the use of mechanized duplication instruments, electronic duplication instruments, or other devices or systems for copying large numbers of articles, except that “original” includes etched prints, lithographic prints, serigraphic prints, and prints from photographs, if the prints are made by hand by the person who created or crafted the etched plate, etched drawing, etched design, lithographic plate, lithographic stone, silkscreen, or photograph from which the prints were made;
  9. “work of art” means a creation or crafting of
    1. a visual article, including a painting, a sculpture, a drawing, a mosaic, a photograph, an etching, a lithograph, and a serigraph;
    2. calligraphy;
    3. clay, textile, fiber, wood, metal, plastic, or glass, or a combination of these materials;
    4. traditional Alaska Native materials, including ivory, bone, grass, baleen, animal skins, wood, or furs; or
    5. a collage or combination of two or more of the categories identified in (A) — (D) of this paragraph.

History. (§ 6 ch 40 SLA 1961; am § 6 ch 83 SLA 1977; am § 7 ch 125 SLA 1978; am §§ 10, 11 ch 104 SLA 1992; am E.O. No. 100, § 8 SLA (1998); am §§ 12 — 14 ch 16 SLA 2008)

Revisor’s notes. —

The definitions in this section were renumbered in 1992, 1998, and 2008 to maintain alphabetical order.

In 1999, in this section, “commissioner of commerce and economic development” was changed to “commissioner of community and economic development” in accordance with § 88, ch. 58, SLA 1999.

In 2004, in this section, “commissioner of community and economic development” was changed to “commissioner of commerce, community, and economic development”, in accordance with § 3, ch. 47, SLA 2004.

Secs. 45.65.080 — 45.65.150. [Renumbered as AS 44.33.501 — 44.33.512.]

Article 2. Artists and Works of Art.

Editor’s notes. —

Section 2, ch. 28, SLA 1988 provides: “The provisions of AS 45.65.200 and 45.65.210 may not be construed to have an effect upon a written or oral contract or arrangement in existence on August 9, 1988, except by the mutual written consent of the parties.”

Sec. 45.65.200. Artists and art dealer relationships.

  1. When an artist delivers or causes to be delivered a work of art of the artist’s own creation to an art dealer for the purpose of sale, or exhibition and sale, on a commission, fee, or other basis of compensation, the acceptance of the work of art by the art dealer is a consignment, and
    1. the art dealer is, with respect to the work of art, the agent of the artist;
    2. the work of art is trust property in the hands of the art dealer for the benefit of the artist;
    3. proceeds from the sale of the work of art are trust funds in the hands of the art dealer for the benefit of the artist;
    4. the art dealer shall return an unsold work of art on demand of the artist;
    5. the art dealer is strictly liable for loss or damage to a work of art while the work of art is in the possession of the art dealer; the value of a lost or damaged work of art is the value established by written agreement between the artist and art dealer before the loss or damage of the work of art; if no written agreement establishing the value of the work of art exists, the value is the fair market value of the work of art less the art dealer’s commission or fee; and
    6. the dealer shall transmit the proceeds to the artist within 30 days of receipt by the dealer; if the sale is on installment, the money from each installment shall first be applied to pay any balance due the artist on the sale, unless the artist expressly agrees in writing that the proceeds on each installment are to be paid according to a percentage established by the consignment agreement.
  2. A work of art initially received as a consignment remains trust property notwithstanding the subsequent purchase of the artwork by the art dealer directly or indirectly for the art dealer’s own account until the consignment price due to the artist is paid in full. The trusteeship continues until the fiduciary obligation of the art dealer with respect to the transaction is discharged in full.

History. (§ 1 ch 28 SLA 1988)

Revisor’s notes. —

Enacted as AS 45.67.010. Renumbered in 1988.

Cross references. —

For protection of consigned works of art from creditors of an art dealer, see AS 45.02.326(d) .

Sec. 45.65.210. Waiver.

  1. A provision of a contract or agreement whereby the artist waives a provision of AS 45.65.200 is void except as provided in this subsection. An artist may waive the provisions of AS 45.65.200 if the waiver is clear, conspicuous, and agreed to in writing by the artist. A waiver under this subsection is not valid with respect to the proceeds of a work of art initially received as a consignment but subsequently purchased by the art dealer directly or indirectly for the art dealer’s own account.
  2. A waiver under (a) of this section may not inure to the benefit of the art dealer’s creditors in a manner that is inconsistent with the artist’s rights under AS 45.65.200 .

History. (§ 1 ch 28 SLA 1988)

Revisor’s notes. —

Enacted as AS 45.67.020. Renumbered in 1988.

Sec. 45.65.250. Definitions.

In AS 45.65.200 45.65.250 , unless the context otherwise requires,

  1. “art dealer” means a person engaged in the business of selling works of art, other than a person exclusively engaged in the business of selling goods at public auction;
  2. “artist” means the creator of a work of art or, if deceased, the heirs or personal representatives of the creator;
  3. “consignment” means that no title to or estate in the goods or right to possession superior to that of the consignor vests in the consignee, notwithstanding the consignee’s power or authority to transfer and convey, to third person, all of the right, title, and interest of the consignor, in and to the goods;
  4. “creditor” has the meaning given in AS 45.01.211 ;
  5. “work of art” means an original or multiple original art work including:
    1. visual art such as a painting, sculpture, drawing, mosaic, or photograph;
    2. calligraphy;
    3. graphic art such as an etching, lithograph, offset print, or silk screen;
    4. craft work in clay, textile, fiber, wood, metal, plastic, or glass materials;
    5. mixed media such as a collage or any combination of art media in this paragraph;
    6. art employing traditional native materials such as ivory, bone, grass, baleen, animal skins, wood, and furs.

History. (§ 1 ch 28 SLA 1988; am § 112 ch 44 SLA 2009)

Revisor’s notes. —

Enacted as AS 45.67.100. Renumbered in 1988.

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 (4), substituted “AS 45.01.211 ” for “AS 45.01.201 ” following “the meaning given in”.

Chapter 66. Sale of Business Opportunities.

Cross references. —

For failure to comply with AS 45.66 as an unlawful trade practice, see AS 45.50.471(b) .

Sec. 45.66.010. Registration required.

A person may not sell or offer to sell a business opportunity unless the person is registered as a seller with the department at least 30 days before the sale or offer to sell begins and has paid the fee required by AS 45.66.040 .

History. (§ 3 ch 128 SLA 2002)

Administrative Code. —

For sale of business opportunities, see 9 AAC 16.

Sec. 45.66.020. Registration procedure.

  1. To register under AS 45.66.010 , a person shall file with the department
    1. the disclosure statement required by AS 45.66.080 and any advertising, pamphlets, brochures, or other materials to be used in the offering or promoting of the business opportunity;
    2. the bond required by AS 45.66.060 ;
    3. an irrevocable consent appointing the department as the person’s agent for the receipt of service of process in a court action or other proceeding against the person, or the successor in interest of the person, for a violation of this chapter;
    4. a completed application form that satisfies (b) of this section;
    5. a signed statement that the person has read and will comply with this chapter and the regulations adopted under it;
    6. the fee required by AS 45.66.040 ; and
    7. other information requested by the department to evaluate whether the person meets the requirements of this chapter.
  2. The department shall establish by regulation the application forms for registrations under this chapter. The application forms must require the submission of the following information:
    1. the nature of the business opportunity and the method by which it will be offered, advertised, or promoted;
    2. the identity and business practices of the person who will be the seller, including information on a related person; and
    3. a disclosure of criminal convictions, civil judgments, orders, consent decrees, and administrative determinations involving allegations of
      1. fraud, theft, embezzlement, fraudulent conversion, misappropriation of property, the use of untrue or misleading representations in an attempt to sell or dispose of real or personal property, violations of this chapter, violations of AS 45.63 (solicitations by telephonic means), violations of AS 45.68 (charitable solicitations), or unfair or deceptive business practices under AS 45.50.471 45.50.561 , or a substantially similar law of another jurisdiction, by the person who will be the seller or by a related person; or
      2. a violation of securities or investment laws by the person who will be the seller or by a related person.
  3. Registration under AS 45.66.010 or renewal under AS 45.66.030 is not complete until the person or seller receives an acknowledgment from the department that the person or seller has complied with (a) of this section or AS 45.66.030 , as applicable.
  4. In this section, “related person” means an owner, employee, agent, or officer of the business opportunity being sold, or a person affiliated with the person who will be the seller of the business opportunity.

History. (§ 3 ch 128 SLA 2002; am § 25 ch 55 SLA 2004)

Administrative Code. —

For sale of business opportunities, see 9 AAC 16.

Sec. 45.66.030. Renewal of registration.

If a seller continues to sell or offer to sell a business opportunity for more than one year from the date of the department’s acknowledgment of the initial registration under this chapter, the seller shall renew the registration each year that the sale or offer to sell continues by filing, before or on the anniversary date of the department’s acknowledgment under AS 45.66.020 (c), a renewal application, on a form established by the department by regulation, requiring information that is similar to the information required under AS 45.66.020 .

History. (§ 3 ch 128 SLA 2002)

Administrative Code. —

For sale of business opportunities, see 9 AAC 16.

Sec. 45.66.040. Registration and renewal fees.

  1. As part of the registration procedure set out in AS 45.66.020(a) , a person shall pay a nonrefundable registration fee to the department. With a renewal application, the seller shall pay a nonrefundable renewal fee. The department shall establish the amount of the registration fee and the renewal fee by regulation.
  2. Under AS 37.05.146(c) , registration and renewal fees collected under this chapter shall be accounted for separately, and appropriations from the account are not made from the unrestricted general fund.

History. (§ 3 ch 128 SLA 2002)

Revisor’s notes. —

In 2002, in subsection (b), “AS 37.05.146(c) ” was substituted for “AS 37.05.146 (b)” to reflect the 2002 relettering of AS 37.05.146 .

Administrative Code. —

For sale of business opportunities, see 9 AAC 16.

Sec. 45.66.050. Material changes in registration information.

If there is a material change in the information provided under AS 45.66.020 or 45.66.030 , the seller shall, within 10 days after the change, file with the department a statement describing the change on a form established by the department by regulation.

History. (§ 3 ch 128 SLA 2002)

Administrative Code. —

For sale of business opportunities, see 9 AAC 16.

Sec. 45.66.060. Surety bond required.

  1. A person registering as a seller shall obtain a surety bond in the amount of $75,000 issued by a surety company authorized to do business in the state. The bond must be in favor of the state for the benefit of a buyer and must satisfy the conditions established by the department by regulation.
  2. If the department finds that the amount of the bond set by (a) of this section is insufficient to protect the public interest, the department may by regulation increase the amount of the bond.

History. (§ 3 ch 128 SLA 2002)

Administrative Code. —

For sale of business opportunities, see 9 AAC 16.

Sec. 45.66.070. Location of offer and sale.

This chapter applies to a sale of, or an offer to sell, a business opportunity if

  1. the offer, regardless of whether either party is then present in this state, originates in this state, or is directed by the offeror to this state and received at the place to which the offer is directed, including a post office box; this paragraph does not include an offer that
    1. appears in a bona fide newspaper or other publication of general circulation that is not published in this state or that is published in this state but more than two-thirds of its circulation was outside this state during the 12 months preceding the offer; or
    2. is made on a radio or television program that originates outside this state and is received in this state;
  2. the acceptance
    1. has not been previously communicated, orally or in writing, to the offeror outside this state;
    2. is communicated to the offeror in this state, regardless of whether the seller or buyer is then present in this state, and the offeree reasonably believes that the offeror is located in this state; and
    3. is received at the place to which it was directed, including a post office box; or
  3. the buyer is domiciled in this state and the business opportunity is or will be operated in this state.

History. (§ 3 ch 128 SLA 2002)

Sec. 45.66.080. Disclosure requirements.

  1. At least 10 days before a buyer signs the contract required by AS 45.66.090 , or at least 10 days before receipt of any consideration by the seller, whichever event occurs first, the seller shall give the buyer the written disclosure statement described in (b) of this section, require the buyer to sign a receipt containing the buyer’s name and the date on which the buyer received the disclosure statement, and give the buyer the original receipt with the buyer’s original signature. The seller shall retain a copy of the receipt.
  2. The department shall specify by regulation the form and content of the disclosure statement required by (a) of this section, including
    1. the seller’s name, type of business organization, address, and name of any parent or affiliated company related to the transaction;
    2. the names, addresses, and other relevant information regarding the owners, officers, directors, and other persons responsible for the seller’s business activities related to the contract;
    3. the business history of the seller and the seller’s representatives and the background of the seller and the seller’s representatives that relates to business opportunities;
    4. the total contract amount to be paid by the buyer and the schedule of payments;
    5. the financial condition of the seller, including audits and recent income statements;
    6. a complete description of the services that the seller will perform for the buyer, including training;
    7. the history of the seller’s registration or attempted registration in this or another state as a seller of business opportunities;
    8. a history of civil actions, criminal actions, and consumer protection complaints as described in AS 45.66.020(b)(3) brought against the seller or the seller’s representatives related to the sale of business opportunities and the resolution of the actions and complaints in this state or another jurisdiction;
    9. identification of any bankruptcy actions filed in court by the seller and the resolution of the actions;
    10. if the seller makes a statement about potential earnings that can be made through a business opportunity, the basis for the statement and the economic risks associated with the business opportunity;
    11. the rights and obligations of the seller and buyer regarding termination of the contract, including the rights arising out of the bond required by AS 45.66.060 ; and
    12. any additional information that the department determines by regulation is reasonable and in the public interest for the seller to provide in order to make a complete disclosure concerning the contract.

History. (§ 3 ch 128 SLA 2002)

Administrative Code. —

For sale of business opportunities, see 9 AAC 16.

Sec. 45.66.090. Written contract required.

  1. In addition to the other requirements of this chapter, a person may not contract to sell a business opportunity unless the contract is in writing and the seller gives a copy of the contract to the buyer when the buyer signs the contract.
  2. The department shall establish by regulation the content and format of the information that must be contained in the contract. At a minimum, the contract must contain
    1. the payment terms, including any escrow account required under AS 45.66.100 ;
    2. the name, address, and telephone number of the seller, the seller’s agent, and each supplier of products, equipment, or supplies that the seller is to deliver to the buyer;
    3. a statement of the form of the seller’s business organization;
    4. a description of services, including any training services, that the seller is to provide to the buyer;
    5. the delivery date of the product, equipment, or supplies being sold or leased;
    6. if the seller has represented that there is a buy-back agreement for the business opportunity or that payments are protected or secured, a complete description of those provisions;
    7. a statement of the buyer’s right to cancel, the circumstances under which cancellation is authorized, and the procedure for cancellation and refunds; and
    8. any other terms that the department determines are necessary to protect the public interest.

History. (§ 3 ch 128 SLA 2002)

Administrative Code. —

For sale of business opportunities, see 9 AAC 16.

Sec. 45.66.100. Restrictions on down payments.

  1. A seller may not require a buyer to pay as a down payment more than 20 percent of the initial payment unless the excess above the 20 percent is placed in an escrow account that meets the requirements of AS 45.66.110 .
  2. In this section,
    1. “down payment” means that portion of the initial payment that the buyer is obligated to pay to the seller before or at the time the products, equipment, supplies, or services are delivered, but does not include any amount that is financed by or for which financing is to be obtained by the seller or that results from financing that the seller assists the buyer to obtain;
    2. “initial payment” means
      1. the total amount that a buyer is obligated to pay under the terms of the contract before or at the time the equipment, supplies, products, or services are delivered or within six months after the buyer commences operation of the business opportunity; or
      2. the entire sale price if the contract sets out a specific total sale price for the purchase of the business opportunity and the total price is to be paid partially as a down payment and then in specific monthly payments or a subsequent lump sum payment.

History. (§ 3 ch 128 SLA 2002)

Sec. 45.66.110. Escrow account requirements.

  1. The holder of an escrow account required by AS 45.66.100 must be a person who is independent from the seller, and the escrow account holder may not make direct disbursements from the escrow account except as provided in (c) and (d) of this section.
  2. A seller who establishes an escrow account required by AS 45.66.100 shall provide to the escrow account holder a copy of the signed contract between the buyer and the seller. The seller shall promptly report to the department the following information:
    1. the name and address of the escrow account holder;
    2. the name and address of the financial institution, including the branch, where the escrow account is located; and
    3. the escrow account number.
  3. Except as provided in (d) of this section or under AS 45.66.120 , money placed in an escrow account required by AS 45.66.100 may not be released until 30 days have passed since the buyer signed the contract and the buyer notifies the escrow account holder in writing that the products, equipment, supplies, or services required by the contract have been delivered within the time set in the contract between the buyer and seller. The buyer shall notify the escrow account holder of a timely delivery within 10 business days after delivery.
  4. Upon notification by the buyer that the contract has been cancelled under AS 45.66.130 , the escrow account holder shall release the money held in the escrow account to the buyer.

History. (§ 3 ch 128 SLA 2002)

Sec. 45.66.120. Actions for claims against escrow account.

  1. A buyer who has a claim against an escrow account required by AS 45.66.100 may bring a civil action against the seller or escrow account holder to recover money from the escrow account.
  2. Upon the filing of an action brought under this section, the clerk of the court shall mail a copy of the complaint to the attorney general and, upon entry of an order or judgment in the action, shall mail a copy of the order or judgment to the attorney general.
  3. A person may not begin an action under this section more than two years after the person discovers or reasonably should have discovered the basis for the claim.
  4. The escrow account holder is not liable for the amount by which claims or damages caused by the seller exceed the amount of the escrow account.

History. (§ 3 ch 128 SLA 2002)

Cross references. —

For the effect of (b) of this section on Rules 4 and 73, Alaska Rules of Civil Procedure, see §§ 4 and 7, ch. 128, SLA 2002, in the Temporary and Special Acts.

Sec. 45.66.130. Cancellation of contract.

  1. A buyer may cancel a contract for any reason if the buyer gives notice of the cancellation to the seller within 30 days after signing the contract.
  2. In addition to the right to cancel under (a) of this section, a buyer may cancel the contract at any time if the seller
    1. failed to comply with AS 45.66.080 or 45.66.090 ;
    2. used untrue, misleading, incomplete, or deceptive statements in any aspect of advertising, promoting, selling, or offering to sell a business opportunity;
    3. fails, within 30 days after the delivery date specified in the contract, to deliver the products, equipment, supplies, or services required under the contract to begin substantial operation of the business to be started under the contract; or
    4. fails to provide a location for the business to be started under the contract if the contract requires the seller to provide a location.
  3. If provided by mail, the buyer’s notice of cancellation is effective when it is deposited in the mail properly addressed to the seller with postage prepaid.
  4. The notice of cancellation is not required to have a particular form. The notice is sufficient if it indicates in writing the intention of the buyer not to be bound by the contract.
  5. Within 15 days after the date the buyer gives a notice of cancellation under this section, the seller shall refund to the buyer any payments, including payments for shipping costs, made by the buyer and terminate all financial obligations of the buyer under the contract. Within five days after receiving the refund, the buyer shall make available to the seller, at a reasonable time and place, any products, equipment, or supplies delivered by the seller.

History. (§ 3 ch 128 SLA 2002)

Sec. 45.66.140. Prohibited representations.

  1. A person may not state that the person is registered as a seller under this chapter unless the person has complied with the registration or renewal requirements, as applicable, of this chapter.
  2. Unless the seller is asked for the information by the buyer, a seller may not state or imply that the seller has a license, consent, or other form of permission from the state to sell business opportunities in this state.
  3. A seller may not make, or cause to be made, a representation that is inconsistent with AS 45.66.160 .
  4. A seller may not state or imply that the seller’s compliance with the laws of this state or a municipality constitutes approval or endorsement of the seller by the state or municipality.

History. (§ 3 ch 128 SLA 2002)

Sec. 45.66.150. Untrue statements or omissions.

A person may not, in connection with a sale of or an offer to sell a business opportunity subject to registration under this chapter, directly or indirectly make an untrue statement of material fact in the registration information required in or under AS 45.66.020 45.66.050 or in other written or oral communications, including the disclosure required by AS 45.66.080 and in advertising related to the sale or offer, or omit to state a material fact necessary, in light of the circumstances under which it is made, to avoid a statement’s being misleading.

History. (§ 3 ch 128 SLA 2002)

Sec. 45.66.160. Unwarranted conclusions.

  1. Acknowledgment of registration by the department under AS 45.66.020(c) does not constitute a finding by the department that a document filed with the department under this chapter is true, complete, or not misleading.
  2. Acknowledgment of registration by the department under AS 45.66.020(c) does not mean that the department has evaluated the merits or qualifications of the seller or business opportunity, or that the department recommends or approves a seller or the business opportunity.
  3. Availability of an exemption under AS 45.66.220 for a seller does not mean that the department recommends or approves the seller or the business opportunity.

History. (§ 3 ch 128 SLA 2002)

Sec. 45.66.170. Waiver prohibited and void.

A seller may not request or obtain from a buyer a waiver of the rights or defenses of the buyer under this chapter. A waiver of the rights or defenses of the buyer under this chapter is void.

History. (§ 3 ch 128 SLA 2002)

Sec. 45.66.180. Seller’s records and files.

  1. A seller shall maintain a complete set of records relating to the advertising and promotion of the seller’s business opportunity for five years and allow the department to inspect and copy them during reasonable business hours.
  2. A seller shall keep all documents relating to a contract entered into by the seller for five years after the date the contract is entered into.

History. (§ 3 ch 128 SLA 2002)

Sec. 45.66.190. Public records.

Except for testimony and records related to an investigation by the department under this chapter, the registration application form, registration renewal form, disclosure statement, bond, contract, and other documents required to be prepared or filed with the department under this chapter, including a document created or obtained by the department under AS 45.66.200 , are public records available for public inspection and copying under AS 40.25.110 40.25.220 .

History. (§ 3 ch 128 SLA 2002)

Sec. 45.66.200. Denial, suspension, or revocation of registration.

  1. Subject to the other requirements of this section and after reviewing a response submitted by the person under (b) of this section, the department may issue an order denying, suspending, or revoking a registration or renewal of a registration made by a person under AS 45.66.010 45.66.030 , or prohibiting a person from selling or offering to sell business opportunities, if the department finds that
    1. the person failed to comply with this chapter or the regulations adopted under this chapter;
    2. the sale or offer to sell would constitute, or has constituted, a misrepresentation of, deceit of, or fraud on the buyer;
    3. the nature of the person’s business enterprise or method of business or the nature or method of the business opportunity includes activities that are illegal where performed;
    4. the person failed to file a document, information, fee, or bond required by AS 45.66.010 45.66.060 ;
    5. the literature or advertising of the person or of another person recommended by the person is misleading, incorrect, materially incomplete, or deceptive;
    6. a person identified in the registration represents an unreasonable risk to the public interest and
      1. has been convicted of
        1. a felony or misdemeanor involving fraud, theft, embezzlement, fraudulent conversion, misappropriation of property, or the use of untrue or misleading representations in the sale of or offer to sell or otherwise dispose of real or personal property;
        2. violations under this chapter, violations of AS 45.63 (solicitations by telephonic means), violations of AS 45.68 (charitable solicitations), or an unfair trade practice prohibited by AS 45.50.471 45.50.561 , or a substantially similar law of another jurisdiction; or
        3. a violation of securities or investment laws;
      2. is subject to a final order or judgment against the person in a civil or administrative action, including a stipulated order or judgment, if the complaint or petition in the action alleged acts constituting
        1. a violation of this chapter or a substantially similar law of another jurisdiction;
        2. fraud, theft, embezzlement, fraudulent conversion, or misappropriation of real or personal property;
        3. the use of untrue or misleading representations in an offer to sell or dispose of real or personal property;
        4. the use of unfair trade practices under AS 45.50.471 45.50.561 or a substantially similar law of another jurisdiction;
        5. a violation of AS 45.63 or AS 45.68, or a substantially similar law of another jurisdiction; or
        6. a violation of securities or investment laws;
      3. is subject to an injunction relating to business activity if the injunction resulted from an action brought by a federal, state, or local public agency, including an action related to an occupational license under AS 08.
  2. Before issuing an order to a person under (a) of this section, the department shall send by certified mail to the address set out in the person’s registration or renewal of registration a notice of intent to issue the order. In the notice, the department shall provide the facts supporting the denial, suspension, or revocation of the registration or renewal of the registration. The person may respond to the notice by submitting a statement signed under penalty of perjury by the person or by an owner or officer of the person.

History. (§ 3 ch 128 SLA 2002; am § 26 ch 55 SLA 2004)

Administrative Code. —

For sale of business opportunities, see 9 AAC 16.

Sec. 45.66.210. Criminal penalties.

  1. A seller who recklessly violates AS 45.66.010 45.66.060 , 45.66.080 45.66.110 , or 45.66.150 is guilty of a class C felony.
  2. A seller who recklessly violates AS 45.66.130(e) , 45.66.140 , or 45.66.170 is guilty of a class A misdemeanor.
  3. Each violation is a separate offense, and a prosecution or conviction for one of the offenses does not bar prosecution or conviction of another offense.
  4. In this section, “recklessly” has the meaning given in AS 11.81.900 .

History. (§ 3 ch 128 SLA 2002)

Cross references. —

For penalties for misdemeanors, see AS 12.55.035 and 12.55.135 .

Sec. 45.66.220. Exemptions.

This chapter does not apply to a sale of or an offer to sell

  1. a business opportunity if the total amount of the payments to be made by the buyer under the contract is less than $250;
  2. a franchise under 16 C.F.R. Part 436;
  3. an ongoing business operated by the seller that is to be sold in its entirety;
  4. a business opportunity to an ongoing business if the seller will provide products, equipment, supplies, or services that are to be sold by the buyer in connection with the buyer’s ongoing business;
  5. sales demonstration equipment, materials, or samples for use in sales demonstrations and not for resale, or product inventory sold to the buyer at a bona fide wholesale price;
  6. a business opportunity by an executor, an administrator, a marshal, a receiver, a trustee in bankruptcy, or a guardian or conservator, or under a judicial sale;
  7. a security registered under AS 45.56 or a security that is exempted by AS 45.56.110 from registration under AS 45.56;
  8. a business opportunity if the sale or offer is made by a person registered with the United States Securities and Exchange Commission when acting within the scope of the person’s Securities and Exchange Commission license or by a person registered by the state under AS 45.56 when acting within the scope of registration;
  9. a business opportunity by an issuer or a subsidiary of an issuer of a class of securities that is
    1. subject to 15 U.S.C. 78a — 78pp (Securities Exchange Act of 1934); and
    2. registered under 15 U.S.C. 78a — 78pp (Securities Exchange Act of 1934) unless exempt from registration under 15 U.S.C. 78l(g)(2)(A) — (C) or (E) — (H);
  10. a business opportunity in which the buyer is
    1. a bank, savings and loan association, trust company, insurance company, credit union, or investment company under 15 U.S.C. 80a- 1 — 80a-64 (Investment Company Act of 1940), pension or profit sharing trust, or other financial institution or institutional buyer; or
    2. a broker-dealer registered under AS 45.56.300 ;
  11. a business opportunity that involves a marketing plan made in conjunction with the registration of a trademark or service mark under 15 U.S.C. 1051 — 1127 (Trademark Act of 1946) if the seller has a minimum net worth of $1,000,000 as determined on the basis of the seller’s most recent audited financial statement prepared within 13 months of the first offer to sell in this state; net worth may be determined on a consolidated basis if one person owns at least 80 percent of the seller and that one person expressly guarantees the obligations of the seller that arise under the sale or offer claimed to be exempt under this paragraph; or
  12. a business opportunity in which either the seller or the buyer is licensed as a real estate broker, associate real estate broker, or real estate salesperson under AS 08.88 and the sale or offer is regulated by AS 08.88.

History. (§ 3 ch 128 SLA 2002; am § 27 ch 65 SLA 2018)

Revisor’s notes. —

In 2018, in paragraph (7) of this section, “AS 45.56.110 ” was substituted for “AS 45.56.205” and, in paragraph (10), “AS 45.56.300 ” was substituted for “AS 45.56.405” to reflect the 2018 renumbering of those sections.

Effect of amendments. —

The 2018 amendment, effective January 1, 2019, in (2), substituted “16 C.F.R. Part 436” for “16 C.F.R. 436”; in (7), twice substituted “AS 45.56” for “AS 45.55” and substituted “AS 45.56.205 [now AS 45.56.110 ]” for “AS 45.55.900 ”, in (8), substituted “AS 45.56” for “AS 45.55”, in (9) (A) and (B), substituted “15 U.S.C. 78a — 78pp” for “15 U.S.C. 78a — 78 lll ”, in (10)(B), near the beginning, substituted “AS 45.56.405” for “AS 45.55”.

Sec. 45.66.230. Coordination with other laws.

  1. The rights and remedies in this chapter are in addition to other legal rights and remedies available to a buyer or the department.
  2. To the extent of the conflict, the provisions of this chapter govern if a sale of or an offer to sell a business opportunity is regulated by this chapter and by AS 45.63 (solicitations by telephonic means), by AS 45.01 — AS 45.08, AS 45.12, AS 45.14, and AS 45.29 (Uniform Commercial Code), or by another law, and it is not possible to comply with or to apply both this chapter and the other law.

History. (§ 3 ch 128 SLA 2002; am § 27 ch 55 SLA 2004)

Sec. 45.66.240. Regulations.

The department may adopt regulations under AS 44.62 (Administrative Procedure Act) to carry out the purposes of this chapter.

History. (§ 3 ch 128 SLA 2002)

Administrative Code. —

For sale of business opportunities, see 9 AAC 16.

Sec. 45.66.900. Definitions.

In this chapter, unless the context indicates otherwise,

  1. “advertising” means a circular, a prospectus, an advertisement, or other material or a communication by radio, television, pictures, or similar means used in connection with a sale of or an offer to sell a business opportunity;
  2. “business opportunity” means an arrangement under which the seller or a person recommended by the seller will provide to the buyer products, equipment, supplies, or services enabling the buyer to start a business and under which one or more of the following occurs or is to occur:
    1. the seller or a person recommended by the seller will provide or assist the buyer in finding locations for the use or operation of vending machines, racks, display cases, or other similar devices on premises that are not owned or leased by the buyer or seller;
    2. the seller or a person recommended by the seller will provide or assist the buyer in finding outlets or accounts for the buyer’s products or services;
    3. the seller or a person specified by the seller will purchase any or all products made, produced, fabricated, grown, bred, or modified by the buyer;
    4. the seller or a person specified by the seller will buy back or is likely to buy back any products made, produced, fabricated, grown, bred, or modified by the buyer using, in whole or in part, the product, supplies, equipment, or services that were initially sold or offered for sale to the buyer by the seller;
    5. the seller makes an oral or written representation that the buyer will derive income from the business that will exceed the price paid to the seller, and the representation would cause a reasonable person in the buyer’s position to believe the income is assured;
    6. the seller will refund all or part of the price paid to the seller or repurchase some or all of the products, equipment, or supplies provided by the seller or a person recommended by the seller if the buyer is dissatisfied with the business; or
    7. the seller will provide the buyer with a marketing plan;
  3. “buyer” means a person who is solicited to become obligated or does become obligated on a contract;
  4. “contract” means an agreement relating to a business opportunity;
  5. “department” means the Department of Law;
  6. “equipment” includes machines, electrical devices, video or audio devices, computer devices, molds, display racks, vending machines, coin-operated game machines, machines that dispense products, and display units of all kinds;
  7. “marketing plan” means advice or training provided to the buyer by the seller or a person recommended by the seller pertaining to the sale of products, equipment, supplies, or services;
  8. “offer” or “offer to sell” means an attempt to sell a business opportunity;
  9. “product” includes a tangible chattel, including food or living animals, that the buyer intends to
    1. sell or lease;
    2. use to perform a service;
    3. resell or offer to resell to the seller; or
    4. provide or offer to provide to the seller, or to another person whom the seller suggests the buyer contact, so that the seller or the other person may assist the buyer, either directly or indirectly, to distribute, sell, lease, or otherwise dispose of a product;
  10. “sale,” regarding the sale of a business opportunity, means a contract to sell, lease, or otherwise dispose of the business opportunity or an interest in the business opportunity for value;
  11. “securities or investment laws” means AS 45.56 (Alaska Securities Act) or a substantially similar statute of another jurisdiction, 15 U.S.C. 77a — 77aa (Securities Act of 1933), 15 U.S.C. 78a — 78pp (Securities Exchange Act of 1934), or 15 U.S.C. 80a-1 — 80b-21 (Investment Company Act of 1940/Investment Advisers Act of 1940);
  12. “sell,” regarding the selling of a business opportunity, means to sell, lease, or otherwise dispose of the business opportunity or an interest in the business opportunity for value;
  13. “seller” means a person, or the person’s agent, who sells or offers to sell a business opportunity;
  14. “services” includes assistance, guidance, direction, work, labor, or other act that may be provided by the seller in the initiation or maintenance of a business;
  15. “supplies” includes materials used to produce, grow, breed, fabricate, modify, develop, or make a product or other item.

History. (§ 3 ch 128 SLA 2002; am § 28 ch 65 SLA 2018)

Effect of amendments. —

The 2018 amendment, effective January 1, 2019, in (11), substituted “AS 45.56” for “AS 45.55” near the beginning, substituted “15 U.S.C. 77a – 77aa” for “15 U.S.C. 77a – 77bbbb”, substituted “(Securities Act of 1933)” for “(Securities Exchange Act of 1933)”, and substituted “15 U.S.C. 78a – 78pp” for “15 U.S.C. 78a – 78 lll ”.

Chapter 68. Charitable Solicitations.

Cross references. —

For violation of AS 45.68 as an unlawful trade practice, see AS 45.50.471(b) .

Administrative Code. —

For charitable solicitation, see 9 AAC 12.

Sec. 45.68.010. Registration.

  1. A charitable organization may not solicit contributions of money or other property unless the charitable organization is registered with the Department of Law.
  2. A person may not solicit contributions of money or other property for a charitable organization for compensation unless the person is registered with the department.
  3. To register under this section, a charitable organization or paid solicitor shall file with the department
    1. a registration statement on a form or in a format provided and established by the department by regulation; and
    2. in the case of a paid solicitor, a bond in the amount and under the conditions established by the department by regulation.
  4. Registration under this section expires on September 1 of each year. To renew a registration, a charitable organization or paid solicitor shall file with the department a registration renewal statement established by the department by regulation and, in the case of a paid solicitor, evidence that a bond that satisfies (c)(2) of this section will be in effect for the renewal period.
  5. A person who is required to register under this section shall report to the department a material change in the information provided in the registration statement or registration renewal statement filed under this section. The person shall report the change within seven days after the change occurs.
  6. The department may require the registration and registration renewal statement required under (c)(1) and (d) of this section to be submitted
    1. under oath or affirmation; or
    2. with notice that false statements made in the statement are punishable as unsworn falsification in the second degree under AS 11.56.210 .
  7. A person may not knowingly provide false statements in documents required by this chapter, including a
    1. registration statement;
    2. registration renewal statement;
    3. report of material change in information required in the registration statement; or
    4. financial report by a paid solicitor.

History. (§ 2 ch 60 SLA 1993; am §§ 28, 29 ch 55 SLA 2004; am § 30 ch 42 SLA 2006)

Administrative Code. —

For charitable solicitation, see 9 AAC 12.

Editor’s notes. —

Section 36(a)(2), ch. 55, SLA 2004 sets out the applicability of the 2004 amendment of subsection (c) and addition of (f) and (g) of this section as applicable to registration and registration renewal statements filed with the Department of Law on and after July 1, 2004. See § 36(a)(2), ch. 55, SLA 2004, in the 2004 Temporary and Special Acts.

Sec. 45.68.015. Registration fees.

The registration statement and registration renewal statement filed under AS 45.68.010(c)(1) and (d) must be accompanied by a registration or registration renewal fee. The department shall establish the amount of the fee by regulation. The fees required by this section are nonrefundable and shall be deposited in the general fund.

History. (§ 30 ch 55 SLA 2004)

Administrative Code. —

For charitable solicitation, see 9 AAC 12.

Editor’s notes. —

Section 36(a)(2), ch. 55, SLA 2004 sets out the applicability of the 2004 addition of this section as applicable to registration and registration renewal statements filed with the Department of Law on and after July 1, 2004. See § 36(a)(2), ch. 55, SLA 2004, in the 2004 Temporary and Special Acts.

Sec. 45.68.020. Contract required.

  1. A paid solicitor may not solicit contributions on behalf of a charitable organization unless the paid solicitor executes a written contract with the charitable organization that clearly states the respective obligations of the paid solicitor and the charitable organization, including
    1. a statement of the method to be used to calculate the compensation of the paid solicitor; the statement must include a reasonable estimate of the expenses, including the estimated compensation of the paid solicitor, to be incurred, directly or indirectly, by the charitable organization in connection with the solicitation;
    2. a statement of the charitable purpose to be described in the solicitation; and
    3. the percentage of the gross contributions that the charitable organization is to receive.
  2. A copy of the contract required by (a) of this section shall be filed with the department.

History. (§ 2 ch 60 SLA 1993)

Administrative Code. —

For charitable solicitation, see 9 AAC 12.

Sec. 45.68.030. Disclosures.

Except as provided by AS 45.68.040 , before soliciting a contribution, a paid solicitor shall clearly and conspicuously disclose the following information to the person being solicited:

  1. the true name of the individual making the solicitation;
  2. the true name of the charitable organization for whom the solicitation is being made;
  3. the true name of the paid solicitor;
  4. the true name of the person who is employing and compensating the individual making the solicitation if the individual is employed for compensation to make the solicitation;
  5. whether the individual making the solicitation is being paid for making the solicitation or is an unpaid volunteer;
  6. the name and physical address of the principal headquarters of the charitable organization for whom the solicitation is being made;
  7. a description of how and where the charitable contributions raised by the paid solicitor are to be utilized for the charitable purpose; and
  8. that a financial statement of the charitable organization for whom the solicitation is being made and a copy of the contract required under AS 45.68.020 will be provided upon request.

History. (§ 2 ch 60 SLA 1993)

Sec. 45.68.040. Confirmation of pledge.

A paid solicitor who makes a solicitation by mail, radio, or television, shall mail written confirmation of a contribution pledge to the contributor within five days after the pledge is received. The confirmation must include a clear and conspicuous disclosure of the information identified in AS 45.68.030 .

History. (§ 2 ch 60 SLA 1993)

Sec. 45.68.050. Unlawful practices.

During a solicitation for a charitable organization, a person may not

  1. use a deceptive act, including an act described in AS 45.50.471 ;
  2. without first being authorized in writing by the person, represent or imply that a contribution is for or on behalf of a person, or use an emblem, device, or printed matter belonging to or associated with the person;
  3. use a name, symbol, or statement so closely related or similar to a name, symbol, or statement used by another charitable organization that the use may confuse or mislead a person solicited for a contribution;
  4. use or exploit the fact of registration under this chapter to suggest or imply that the registration constitutes an endorsement or approval by the state; or
  5. represent directly or by implication that a charitable organization will receive from the contributions raised by a paid solicitor a greater percentage of a contribution than allowed under the contract executed under AS 45.68.020 .

History. (§ 2 ch 60 SLA 1993)

Sec. 45.68.055. Paid solicitor financial reports.

  1. Within 90 days after a solicitation campaign is completed and, if a solicitation campaign lasts more than one year, on the one-year anniversary of the commencement of the campaign, a paid solicitor shall file with the department a financial report in accordance with this section.
  2. The financial report must
    1. be submitted on a form or in a format provided and established by the department of regulation;
    2. include gross revenue and an itemization of all expenses incurred in the solicitation campaign during the reporting period; and
    3. be signed by two authorized officials of the charitable organization.
  3. The authorized contracting agent for the paid solicitor shall sign the report required by (b) of this section. Signature of the report under this subsection must be made under oath or affirmation, but submission of false information in a notice that is not signed under oath or affirmation is punishable as an unsworn falsification in the second degree under AS 11.56.210 .

History. (§ 31 ch 55 SLA 2004; am § 31 ch 42 SLA 2006)

Administrative Code. —

For charitable solicitation, see 9 AAC 12.

Editor’s notes. —

Section 36(b), ch. 55, SLA 2004 directs that the provisions of this section apply to solicitation campaigns that commence on or after July 1, 2004. See § 36(b), ch. 55, SLA 2004, in the 2004 Temporary and Special Acts.

Sec. 45.68.060. Public records.

The registration statement, registration renewal statement, financial reports of paid solicitors, contracts, and other documents required to be filed with the department under this chapter are public records available for inspection and copying under AS 40.25.110 40.25.220 .

History. (§ 2 ch 60 SLA 1993; am § 32 ch 55 SLA 2004)

Revisor’s notes. —

In 2000, “AS 40.25.110 40.25.220 ” was substituted for “AS 09.25.110 — 09.25.220 ” to reflect the 2000 renumbering of AS 09.25.110 — 09.25.220 .

Editor’s notes. —

Section 36(b), ch. 55, SLA 2004 directs that the provisions of the 2004 amendment of this section apply to solicitation campaigns that commence on or after July 1, 2004. See § 36(b), ch. 55, SLA 2004, in the 2004 Temporary and Special Acts.

Sec. 45.68.070. Retention and inspection of fiscal records.

A charitable organization that is required to be registered under this chapter or that is exempted from this chapter by AS 45.68.120 and a paid solicitor that is required to be registered under this chapter or that is exempted from this chapter by AS 45.68.120 shall maintain the records required by this chapter for a period of five years in a form that permits the department to make a complete audit of solicitations by the charitable organization or paid solicitor.

History. (§ 2 ch 60 SLA 1993)

Sec. 45.68.080. Substituted service.

  1. A charitable organization or paid solicitor that is required to be registered under this chapter and that either has its principal place of business outside of the state or is organized under the laws of another state is considered to have irrevocably appointed the department as its agent for the service of a summons, subpoena, or other process directed to the charitable organization or paid solicitor, or to a director, officer, partner, or principal of the charitable organization or paid solicitor in an action or other proceeding brought under this chapter.
  2. Service under (a) of this section is complete if the department immediately sends notice of the service and a copy of the process to the charitable organization, paid solicitor, or other person to whom it is directed by registered mail, return receipt requested, to the last address known to the department of the charitable organization or paid solicitor.

History. (§ 2 ch 60 SLA 1993)

Administrative Code. —

For charitable solicitation, see 9 AAC 12.

Sec. 45.68.090. Private enforcement.

  1. A charitable organization that suffers damages as a result of a violation of this chapter by another charitable organization or by a paid solicitor may bring a civil action against the violator.
  2. A person who makes a contribution to a charitable organization or to a paid solicitor that violates this chapter may bring a civil action against the violator.
  3. In an action under (a) or (b) of this section, a court may
    1. award damages for the violation;
    2. enjoin future violations;
    3. provide other relief that the court determines is necessary to restore to the person damaged real or personal property that was acquired by the violator by means of the violation;
    4. require the violator, under appropriate circumstances, to pay the full attorney fees and costs incurred by the charitable organization or other person bringing the action.
  4. A charitable organization or other person who brings an action under this section shall serve a copy of the complaint on the department when the action is filed, and, upon entry of an order or judgment in the action, shall mail a copy of the order or judgment to the department.

History. (§ 2 ch 60 SLA 1993)

Cross references. —

For effect of enactment of this section on Alaska Rules of Civil Procedure 79 and 82, see § 4, ch. 60, SLA 1993 in the Temporary and Special Acts.

Sec. 45.68.100. Criminal penalty.

A person who solicits contributions for a charitable organization for compensation without complying with the registration requirements of AS 45.68.010 is guilty of a class A misdemeanor.

History. (§ 2 ch 60 SLA 1993)

Cross references. —

For penalties for misdemeanors, see AS 12.55.035 and 12.55.135 .

Sec. 45.68.110. Remedies not exclusive.

The remedies in this chapter are in addition to other remedies available to a person or the department for a violation of this chapter.

History. (§ 2 ch 60 SLA 1993)

Sec. 45.68.120. Exemptions from registration requirement.

  1. Registration is not required under AS 45.68.010 for
    1. a church or religious organization that is exempt from filing a federal annual information return under 26 U.S.C. 6033(a)(3)(A)
    2. a candidate for national, state, or local office, and a political party or other committee or group if the candidate, party, committee, or group is required to file financial information with the Alaska Public Offices Commission under AS 15.13 or with the Federal Election Commission under 2 U.S.C. 431 — 456 (Federal Election Campaign Act);
    3. a charitable organization that does not intend to raise or receive contributions, excluding government grants, in excess of $5,000 during a fiscal year of the charitable organization, or that does not intend to receive contributions from more than 10 persons during a fiscal year of the charitable organization if, in either situation,
      1. all of the organization’s functions, including solicitation, are performed by persons who are not paid for their services; and
      2. an officer or member of the organization is not paid or does not otherwise receive all or a part of the assets or income of the charitable organization;
    4. a person or municipality who has a permit under AS 05.15.100 .
  2. A person who qualifies for an exemption under (a)(3) of this section shall maintain for five years the records necessary to prove that the organization qualifies for the exemption.
  3. Notwithstanding (a)(3) of this section, if a charitable organization actually raises or receives more than $5,000 in contributions during a fiscal year of the charitable organization or receives contributions from more than 10 persons during the same fiscal year, the charitable organization shall, within 30 days after the earlier event, register with the department under AS 45.68.010 .

History. (§ 2 ch 60 SLA 1993; am § 45 ch 8 SLA 2011)

Administrative Code. —

For charitable solicitation, see 9 AAC 12.

Effect of amendments. —

The 2011 amendment, effective May 10, 2011, substituted “26 U.S.C. 6033(a)(3)(A)” for “26 U.S.C. 6033(a)(2)(A)” in (a)(1).

Sec. 45.68.130. Regulations.

The department shall adopt regulations under AS 44.62 (Administrative Procedure Act) to implement this chapter.

History. (§ 2 ch 60 SLA 1993)

Administrative Code. —

For charitable solicitation, see 9 AAC 12.

Sec. 45.68.900. Definitions.

In this chapter,

  1. “charitable organization” means a nonprofit organization that
    1. is operated for the relief of poverty, distress, or other condition of public concern in the state; or
    2. the Internal Revenue Service determines to be a tax exempt organization under 26 U.S.C. 501(c)(3) (Internal Revenue Code);
  2. “contributions” means contributions of money or other property;
  3. “department” means the Department of Law;
  4. “paid solicitor” means a person who is required to be registered under AS 45.68.010(b) , and includes a person who is employed, procured, or engaged, directly or indirectly, by a paid solicitor to solicit, if the person is compensated; “paid solicitor” does not include
    1. an attorney licensed to practice law in this or another state, an investment counselor, an insurance company, or a supervised financial institution, to the extent the attorney, investment counselor, insurance company, or supervised financial institution advises the person on whether to make a contribution; or
    2. a bona fide salaried officer, employee, or volunteer of a charitable organization;
  5. “solicit” means to request, directly or indirectly, and includes
    1. an oral or written request;
    2. a request made by an announcement to the news media or by radio, television, telephone, facsimile machine, or other transmission of images or information;
    3. a request made in a handbill or other written advertisement that is distributed or posted;
    4. the sale of, or attempt to sell, a membership, an advertisement, advertising space, or a tangible item by making a request for financial support for a charitable organization or purpose, by using or referring to the name of a charitable organization as a reason for making the request, or by making a statement that all or part of the sale proceeds will be used for a charitable purpose or benefit a charitable organization;
  6. “solicitation campaign” means soliciting contributions of money or other property from two or more persons for the same charitable organization;
  7. “supervised financial institution” means a commercial bank, savings bank, mutual savings bank, trust company, savings and loan association, credit union, industrial loan company, personal property broker, consumer finance lender, commercial finance lender, or other financial institution if the financial institution is subject to regulation by this state or the United States.

History. (§ 2 ch 60 SLA 1993; am § 33 ch 55 SLA 2004; am § 101 ch 13 SLA 2019)

Revisor's notes. —

Reorganized in 2004 to alphabetize the defined terms.

Administrative Code. —

For charitable solicitation, see 9 AAC 12.

Effect of amendments. —

The 2019 amendment, effective October 17, 2019, in (5)(B), substituted “facsimile” for “telegraph, telefax” following “telephone,”.

Chapter 70. Sureties.

Cross references. —

For surety insurance generally, see AS 21.63.

Sec. 45.70.010. Release and substitution of sureties.

A surety on an undertaking, bond, or stipulation, executed or given in a judicial proceeding or filed in a court in the state or given on behalf of or by a public officer, employee, or agent in connection with the duties or performance of the duties of office shall be released and discharged from liability on the undertaking, bond, or stipulation and new surety or sureties substituted when the principal, surety, or obligee files in the court or presents to a person authorized by law to approve or accept on behalf of the obligee the undertaking, stipulation, or bond, a written application for discharge from the undertaking, stipulation, or bond, together with a new undertaking, stipulation, or bond, executed by a competent surety, qualified to act as a surety under the laws of the state, and conditioned as in the former undertaking, stipulation, or bond and providing that the surety accepts all liability theretofore or thereafter accruing under the former as well as the new undertaking, stipulation, or bond and stand in the place of and substitute for the surety on the former undertaking, stipulation, or bond.

History. (§ 30-1-1 ACLA 1949)

Collateral references. —

74 Am. Jur. 2d, Suretyship, §§ 54, 55.

72 C.J.S., Principal and Surety, §§ 185, 186, 301.

Sec. 45.70.020. Discharge from liability.

Upon filing the new undertaking, stipulation, or bond, and the approval of it as to form, penalty, and surety, the former undertaking, stipulation, or bond, and the surety on it is immediately discharged from all liability in any manner or at any time arising or accruing.

History. (§ 30-1-2 ACLA 1949)

Collateral references. —

74 Am. Jur. 2d, Suretyship, § 29 et seq.

Chapter 75. Weights and Measures Act.

Administrative Code. —

For division of measurement standards, see 3 AAC, part 3.

Article 1. Standard Weights and Measures.

Administrative Code. —

For specifications, tolerances, and regulations for weighing and measuring devices, see 3 AAC 32 and 17 AAC 90.

Sec. 45.75.010. Systems of weights and measures.

The system of weights and measures in customary use in the United States and the metric system of weights and measures are jointly recognized, and one or the other of these systems shall be used for all commercial purposes in the state. The definitions of basic units of weight and measure, the tables of weight and measure, and weight and measure equivalents, as published by the National Bureau of Standards or its successor organization, the National Institute of Standards and Technology, govern weighing and measuring equipment and transactions in the state.

History. (§ 3 ch 101 SLA 1961; am § 52 ch 50 SLA 1989)

Collateral references. —

79 Am. Jur. 2d, Weights and Measures, § 1 et seq.

94 C.J.S., Weights and Measures, § 1 et seq.

Sec. 45.75.020. State standards of weight and measure.

The weights and measures obtained by the state in conformity with them and certified by the National Bureau of Standards or its successor organization, the National Institute of Standards and Technology, are the state standards of weight and measure. The state standards shall be kept in a safe and suitable place in the office or laboratory of the Department of Transportation and Public Facilities. They may not be removed from the office or laboratory except for repairs or for certification. The state standards shall be used only in verifying the office standards and for scientific purposes.

History. (§ 5 ch 101 SLA 1961; am § 53 ch 50 SLA 1989; am E.O. No. 98 § 9 (1997))

Collateral references. —

79 Am. Jur. 2d, Weights and Measures, §§ 4, 10, 19 et seq.

Article 2. State and Local Administration of Weight and Measure Regulation.

Sec. 45.75.030. State director and inspectors of weights and measures.

The commissioner of transportation and public facilities is ex officio state director of weights and measures. The director may appoint state inspectors.

History. (§ 7 ch 101 SLA 1961; am E.O. No. 98 § 10 (1997))

Collateral references. —

94 C.J.S., Weights and Measures, § 9.

Sec. 45.75.040. General powers and duties of director.

The director is the custodian of the state standards of weight and measure and of the other standards and equipment provided for by this chapter. The director shall keep accurate records of the standards and equipment. The director shall enforce this chapter. The director shall supervise the weights and measures offered for sale, sold, or in use in the state.

History. (§ 8 ch 101 SLA 1961)

Administrative Code. —

For testing equipment, see 17 AAC 90, art. 1.

For disposition of incorrect apparatus, see 17 AAC 90, art. 2.

For electric meters, see 17 AAC 90, art. 3.

For commodities, see 17 AAC 90, art. 4.

For registered service providers, see 17 AAC 90, art. 5.

For national type evaluation program (NTEP), see 17 AAC 90, art. 6.

For appeals, see 17 AAC 90, art. 7.

For metrology laboratory fee for service, see 17 AAC 90, art. 8.

For weighing and measuring device registration and fees, see 17 AAC 90, art. 9.

For definitions, see 17 AAC 90, art. 10.

Sec. 45.75.050. Adoption of regulations.

  1. The director shall adopt regulations for the enforcement of this chapter under AS 44.62 (Administrative Procedure Act). These have the effect of law.
  2. The regulations may include
    1. standards of net weight, measure, or count, and reasonable standards of fill, for a commodity in package form;
    2. rules governing the technical and reporting procedures to be followed, and the report and record forms and marks of approval and rejection to be used by inspectors of weights and measures in the discharge of their official duties;
    3. exemptions from the sealing or marking requirements of AS 45.75.120 for weights and measures of a character or size that sealing or marking would be inappropriate, impracticable, or damaging to the apparatus in question;
    4. for classes of weights and measures of a character that retesting is unnecessary to continued accuracy, exemptions from the requirements of AS 45.75.070 and 45.75.080 for testing, and schedules fixing the frequency of required retests for classes of devices exempted; and
    5. in the implementation of AS 19.10.060(b) , provisions governing the size, weight, and load limitations established under AS 19.10.060 ; the issuance of permits for overweight and oversize vehicles; and the operation of weigh stations.
  3. The regulations must include specifications, tolerance, and regulations for weights and measures of the character of those specified in AS 45.75.080 , designed to eliminate from use, without prejudice to apparatus that conforms as closely as practicable to the official standards, those that
    1. are not accurate;
    2. are of such construction that they are not reasonably permanent in their adjustment or will not repeat their indications correctly; or
    3. facilitate the perpetration of fraud.
  4. The specifications, tolerances, and regulations for commercial weighing and measuring devices, together with amendments to them, as recommended by the National Bureau of Standards or its successor organization, the National Institute of Standards and Technology, and published in the National Bureau of Standards or its successor organization, the National Institute of Standards and Technology, Handbook 44 and supplements to it, or in any publication revising or superseding Handbook 44, are the specifications, tolerances, and regulations for commercial weighing and measuring devices of the state, except as specifically modified, amended, or rejected by a regulation adopted by the director.
  5. For the purposes of this chapter, apparatus is correct when it conforms to the requirements adopted in accordance with this section; other apparatus is considered incorrect.
  6. The director shall adopt regulations establishing reasonable fees for testing, inspection, and other services provided under this chapter, and procedures for collecting the fees.

History. (§ 9 ch 101 SLA 1961; am § 1 ch 85 SLA 1987; am § 54 ch 50 SLA 1989; am § 73 ch 36 SLA 1990; am E.O. No. 98 § 11 (1997))

Revisor’s notes. —

Two occurrences of the word “annual” were deleted from (b)(4) of this section in 1986 to correct a manifest error in the original enactment.

Administrative Code. —

For division of measurement standards, see 17 AAC 90.

For commercial motor vehicles: size and weight, see 17 AAC 25, art. 1.

For oversize and overweight vehicles, see 17 AAC 25, art. 3.

For waivers, see 17 AAC 25, art. 4.

For testing equipment, see 17 AAC 90, art. 1.

For disposition of incorrect apparatus, see 17 AAC 90, art. 2.

For electric meters, see 17 AAC 90, art. 3.

For commodities, see 17 AAC 90, art. 4.

For registered service providers, see 17 AAC 90, art. 5.

For national type evaluation program (NTEP), see 17 AAC 90, art. 6.

For appeals, see 17 AAC 90, art. 7.

For metrology laboratory fee for service, see 17 AAC 90, art. 8.

For weighing and measuring device registration and fees, see 17 AAC 90, art. 9.

For definitions, see 17 AAC 90, art. 10.

Sec. 45.75.060. Office and working standards and equipment.

The state shall supply the Department of Transportation and Public Facilities with a duplicate set of state standards of weight and measure, referred to in this chapter as office standards. The state shall supply field standards and the equipment that is necessary to carry out this chapter. The office standards and field standards shall be verified upon their initial receipt and at least once each year afterward. The office standards shall be verified by direct comparison with the state standards. The field standards shall be verified by comparison with the office standards.

History. (§ 6 ch 101 SLA 1961; am E.O. No. 98 § 12 (1997))

Sec. 45.75.070. Testing and inspection of local standards and weights and measures at state-supported institutions.

  1. At least once every five years, the director shall test the standards of weight and measure obtained by a city that has appointed a sealer of weights and measures, and shall approve them if they are correct.  The director shall inspect the standards at least once every two years.
  2. The director shall from time to time test all weights and measures used in checking the receipt or disbursement of supplies in every institution maintained by money appropriated by the legislature, and shall report the findings, in writing, to the supervisory board and to the executive officer of the institution concerned.

History. (§ 10 ch 101 SLA 1961)

Administrative Code. —

For testing equipment, see 17 AAC 90, art. 1.

For disposition of incorrect apparatus, see 17 AAC 90, art. 2.

For electric meters, see 17 AAC 90, art. 3.

For commodities, see 17 AAC 90, art. 4.

For registered service providers, see 17 AAC 90, art. 5.

For national type evaluation program (NTEP), see 17 AAC 90, art. 6.

For appeals, see 17 AAC 90, art. 7.

For metrology laboratory fee for service, see 17 AAC 90, art. 8.

For weighing and measuring device registration and fees, see 17 AAC 90, art. 9.

For definitions, see 17 AAC 90, art. 10.

Collateral references. —

79 Am. Jur. 2d, Weights and Measures, § 17.

Sec. 45.75.080. General testing.

  1. The director may inspect and test, to ascertain if they are correct, all weights and measures kept, offered, or exposed for sale. The director shall, at least annually and more often as considered necessary, inspect and test, to ascertain if they are correct, all weights and measures commercially used in
    1. determining the weight, measurement, or count of commodities or things sold, or offered or exposed for sale, on the basis of weight or of measure;
    2. computing the basic charge or payment for services rendered on the basis of weight or of measure or count; or
    3. determining weight or measurement when a charge is made for this determination.
  2. However, in the case of single-service devices, that is, devices designed to be used commercially only once and to be then discarded, and in the case of devices uniformly mass-produced, as by means of a mold or die, and not susceptible of individual adjustment, the inspection and testing of each individual device is not required and the inspecting and testing requirements of this section are satisfied when inspections and tests are made on representative samples of the devices.  The lots from which representative samples are inspected and tested are held correct or incorrect upon the basis of the results of the inspections and tests on the samples.

History. (§ 11 ch 101 SLA 1961; am § 1 ch 78 SLA 1969; am § 1 ch 15 SLA 1994)

Administrative Code. —

For testing equipment, see 17 AAC 90, art. 1.

For disposition of incorrect apparatus, see 17 AAC 90, art. 2.

For electric meters, see 17 AAC 90, art. 3.

For commodities, see 17 AAC 90, art. 4.

For registered service providers, see 17 AAC 90, art. 5.

For national type evaluation program (NTEP), see 17 AAC 90, art. 6.

For appeals, see 17 AAC 90, art. 7.

For metrology laboratory fee for service, see 17 AAC 90, art. 8.

For weighing and measuring device registration and fees, see 17 AAC 90, art. 9.

For definitions, see 17 AAC 90, art. 10.

Sec. 45.75.090. Investigations.

The director shall investigate complaints of violations of this chapter, and shall initiate and conduct the investigations that the director considers appropriate and advisable to develop information on prevailing procedures in commercial quantity determination and on possible violations of this chapter and to promote the general objective of accuracy in the determination and representation of quantity in commercial transactions.

History. (§ 12 ch 101 SLA 1961)

Administrative Code. —

For testing equipment, see 17 AAC 90, art. 1.

Collateral references. —

79 Am. Jur. 2d, Weights and Measures, § 10 et seq.

Sec. 45.75.100. Inspection of packages.

  1. The director shall, from time to time, weigh or measure and inspect packages or amounts of commodities kept, offered, or exposed for sale to determine whether they contain the amounts represented and whether they are kept, offered, or exposed for sale in accordance with law.  When packages or amounts of commodities do not contain the amounts represented, or are kept, offered, or exposed for sale in violation of law, the director may order them off sale and may mark or tag them to show they are illegal.  The director may use recognized sampling procedures. Compliance of a given lot of packages shall be determined on the basis of the result obtained on a sample selected from and representative of the lot.
  2. A person may not
    1. sell, or keep, offer, or expose for sale in intrastate commerce a package or amount of commodity that has been ordered off sale or marked or tagged as provided in this section until the package or amount of commodity has been brought into full compliance with all legal requirements; or
    2. dispose of a package or amount of commodity that is ordered off sale or marked or tagged as provided in this section and that does not meet legal requirements, except with the specific approval of the director.

History. (§ 13 ch 101 SLA 1961)

Sec. 45.75.110. Stop-use, stop-removal, and removal orders.

  1. The director may issue stop-use orders, stop-removal orders, and removal orders for weights and measures used or capable of being used commercially.  The director may issue stop-removal orders and removal orders for packages or amounts of commodities kept, offered, or exposed for sale whenever the director considers it necessary or expedient in enforcing this chapter.
  2. A person may not use, remove from the premises specified, or fail to remove from the premises specified a weight, measure, or package or amount of commodity contrary to a stop-use order, stop-removal order, or removal order issued under this section.

History. (§ 14 ch 101 SLA 1961)

Administrative Code. —

For disposition of incorrect apparatus, see 17 AAC 90, art. 2.

For electric meters, see 17 AAC 90, art. 3.

For commodities, see 17 AAC 90, art. 4.

Sec. 45.75.120. Disposition of correct and incorrect apparatus.

  1. The director shall approve for use and seal or mark with appropriate devices the weights and measures that the director finds upon inspection and test to be correct as provided in AS 45.75.050 , and shall reject and mark or tag as “rejected” the weights and measures that the director finds, upon inspection or test, to be incorrect as provided in AS 45.75.050 but which in the director’s best judgment are susceptible of satisfactory repair.  This sealing or marking is not required for weights and measures exempted by regulation of the director.
  2. The director shall condemn, and may seize and destroy weights and measures found to be incorrect that, in the director’s best judgment, are not susceptible of satisfactory repair. Weights and measures that are rejected may be confiscated and destroyed by the director if not corrected as required by AS 45.75.180 or if used or disposed of contrary to the requirements of AS 45.75.180 .

History. (§ 15 ch 101 SLA 1961)

Administrative Code. —

For disposition of incorrect apparatus, see 17 AAC 90, art. 2.

For electric meters, see 17 AAC 90, art. 3.

For commodities, see 17 AAC 90, art. 4.

Sec. 45.75.130. Police powers and right of entry and stoppage.

In the enforcement of this chapter and any other law dealing with weights and measures the director has special police powers. The director may arrest, without formal warrant, any person violating the law, and seize for use as evidence, without formal warrant, incorrect or unsealed weights and measures or amounts or packages of commodity, used, retained, offered or exposed for sale, or sold in violation of law. In performing the director’s duties, the director may enter, without formal warrant, any structure or premises, and stop any person and require the person to proceed to a specified place.

History. (§ 16 ch 101 SLA 1961)

Sec. 45.75.131. Issuance of citations.

  1. A peace officer or an employee of the Department of Transportation and Public Facilities who is authorized by the commissioner of transportation and public facilities to enforce this chapter may issue a citation to a person who
    1. violates a weight, size, or load limitation adopted by the Department of Transportation and Public Facilities under AS 19.10.060 ;
    2. violates the terms of an overweight or oversize vehicle permit issued under AS 19.10.060 (b);
    3. violates a regulation adopted under AS 19.10.060(b) or (c), AS 28.05.011(a)(2) , or AS 45.75.050(b)(5) ; or
    4. commits a violation identified under AS 45.75.380 .
  2. A citation issued under this section must comply with the standards adopted under AS 12.25.175 12.25.230 . A person receiving the citation is not required to sign a promise to appear in court.
  3. The time specified in the notice to appear on a citation issued under this section must be at least five working days after the issuance of the citation.
  4. The commissioner of public safety is responsible for the issuance of books containing appropriate citations and shall maintain a record of each book and each citation contained in it. The commissioner of public safety shall require and retain a receipt for every book issued to an employee of the Department of Transportation and Public Facilities designated by the commissioner of transportation and public facilities to provide investigative services to enforce provisions of this chapter.
  5. On or before the 10th working day after issuance, a peace officer or an employee who issues a citation under this section shall deposit the original or a copy of the citation with a court having jurisdiction over the alleged offense. Upon its deposit with the court, the citation may be disposed of only by trial in the court or other official action taken by the magistrate, judge, or prosecutor. The peace officer or employee who issued the citation may not dispose of it or copies of it or of the record of its issuance except as required under this subsection and (f) of this section.
  6. The commissioner of public safety shall require the return of a copy of every citation issued under this section and of all copies of every citation that has been spoiled or on which an entry has been made and not issued to an alleged violator. The commissioner of public safety shall also maintain in connection with every citation issued a record of the disposition of the charge by the court in which the original or copy of the citation was deposited.
  7. A citation issued under this section is considered to be a lawful complaint for the purpose of prosecution.
  8. Unless the citation has been voided or otherwise dismissed by the magistrate, judge, or prosecutor, or bail has been forfeited under AS 45.75.133 , a person who fails to appear in court to answer a citation issued under this section, regardless of the disposition of the charge for which the citation was issued, is guilty of failure to obey a citation under AS 12.25.230(b) .

History. (§ 2 ch 85 SLA 1987; am § 2 ch 15 SLA 1994; am E.O. No. 98 §§ 13, 14 (1997); am E.O. No. 99 § 72 (1997); am § 19 ch 48 SLA 1998; am §§ 50 — 54 ch 29 SLA 2010)

Administrative Code. —

For commercial motor vehicles: safety and hazardous materials, see 17 AAC 25, art. 2.

For oversize and overweight vehicles, see 17 AAC 25, art. 3.

Effect of amendments. —

The 2010 amendment, effective July 1, 2010, in (b) substituted “comply with the standards adopted under AS 12.25.175 12.25.230 ” for “be in writing”; in (c), substituted “five working days” for “15 days”, and deleted “, unless the person cited requests an earlier hearing” at the end of the subsection; in (e), added “On or before the 10th working day after issuance” at the beginning; rewrote (g); in (h), substituted “failure to obey a citation under AS 12.25.230(b) ” for “a class B misdemeanor”.

Editor’s notes. —

Under § 61, ch. 29, SLA 2010, the 2010 amendments to (b), (c), (e), (g), and (h) of this section apply “to all citations issued . . . for violations occurring on or after July 1, 2010.”

Sec. 45.75.133. Bail forfeiture.

  1. The supreme court shall specify by rule or order those violations that are appropriate for disposition without court appearance, and shall establish a schedule of bail amounts. The maximum bail forfeiture amount for an offense may not exceed the maximum fine specified by law for that offense. If the person who has been cited can dispose of the violation without court appearance, the issuing peace officer or employee shall write on the citation the amount of bail forfeiture applicable to the violation.
  2. If a person cited for a violation for which a bail forfeiture amount has been established under (a) of this section does not contest the citation, the person may, within 30 days after the date of the citation, mail or personally deliver to the clerk of the court in which the citation is filed by the employee
    1. the amount of bail indicated on the citation for that offense; and
    2. a copy of the citation indicating that the right to an appearance is waived, a plea of no contest is entered, and the bail is forfeited.
  3. When the cited person has forfeited bail under (b) of this section, the court shall enter a judgment of conviction. Forfeiture of bail is a complete satisfaction for the violation. The clerk of the court accepting the bail forfeiture shall provide the offender with a receipt stating that fact if requested.
  4. A person cited under this section is guilty of failure to obey a citation under AS 12.25.230(b) if the person fails to pay the bail amount established under (a) of this section or fails to appear in court as required.
  5. Notwithstanding other provisions of law, if a person cited for a violation for which a bail forfeiture amount has been established under (a) of this section appears in court and is found guilty, the court may not impose a penalty that exceeds the bail forfeiture amount for that offense established under (a) of this section.

History. (§ 2 ch 85 SLA 1987; am § 5 ch 25 SLA 1995; am §§ 55, 56 ch 29 SLA 2010)

Cross references. —

For oversize vehicle bail schedule, see Alaska Court Rule of Administration 43.6.

Effect of amendments. —

The 2010 amendment, effective July 1, 2010, in (b), substituted “If a” for “A”, added “does not contest the citation, the person” following “(a) of this section”, and substituted “within 30 days” for “within 15 days”; rewrote (d).

Editor’s notes. —

Under § 61, ch. 29, SLA 2010, the 2010 amendments to (b) and (d) of this section apply “to all citations issued . . . for violations occurring on or after July 1, 2010.”

Sec. 45.75.140. Powers and duties of deputy director and inspector.

The powers and duties of the director specified in AS 45.75.070 45.75.130 , 45.75.170 , and 45.75.380 shall also be exercised by the deputy director and inspectors, when acting under the instructions and at the direction of the director.

History. (§ 17 ch 101 SLA 1961)

Revisor’s notes. —

“AS 45.75.070 45.75.130 ” was substituted for “AS 45.75.070 , 45.75.130 ” in 1990 to correct a manifest error.

Sec. 45.75.150. Appointment of city sealers and deputy sealers of weights and measures.

  1. A city may appoint a sealer of weights and measures, and the deputy sealers of weights and measures it needs.  If the city appoints a sealer, it shall obtain at its expense the standards of weights and measures and the additional equipment, for use in the enforcement of this chapter in the city, that the director prescribes.
  2. When the standards of weight and measure provided by a city are examined and approved by the director, they are the official standards for the city. At least every five years, the sealer shall make or arrange to have made comparisons between the field standards and appropriate standards of a higher order belonging to the city or to the state, in order to maintain the field standards in accurate condition.

History. (§ 18 ch 101 SLA 1961)

Collateral references. —

94 C.J.S., Weights and Measures, §§ 13, 16 et seq.

Sec. 45.75.160. City sealers and deputy sealers.

The sealer of a city, and a deputy sealer when acting under the instructions and direction of the sealer, have the same powers and shall perform the same duties within the city as those granted to and imposed upon the director by AS 45.75.080 45.75.130 and 45.75.380 .

History. (§ 19 ch 101 SLA 1961)

Sec. 45.75.170. Concurrent jurisdiction.

In each city having a sealer of weights and measures, the director has concurrent authority to enforce this chapter.

History. (§ 20 ch 101 SLA 1961)

Sec. 45.75.180. Duty of owners of incorrect apparatus.

Weights and measures rejected by the director or a sealer remain subject to the control of the rejecting authority until suitable repair or disposition of them is made as required by this section. The owner of a rejected weight and measure shall correct it within 30 days or a longer period authorized by the rejecting authority; or, may dispose of it in the manner authorized by the rejecting authority. Rejected weights and measures may not again be used commercially until officially re-examined and found to be correct or until specific written permission for their use is issued by the rejecting authority.

History. (§ 21 ch 101 SLA 1961)

Administrative Code. —

For electric meters, see 17 AAC 90, art. 3.

Article 3. Standards and Regulation for Sale of Commodities.

Sec. 45.75.190. Method of sale of commodities.

  1. Commodities in liquid form may be sold only by liquid measure or by weight.  Except as otherwise provided in this chapter, commodities not in liquid form may be sold only by weight, by measure of length or area, or by count. However, liquid commodities may be sold by weight and commodities not in liquid form may be sold by count only if the method gives accurate information as to the quantity of commodity sold.
  2. The provisions of this section do not apply to
    1. commodities when sold for immediate consumption on the premises where sold;
    2. vegetables when sold by the head or bunch;
    3. commodities in containers standardized by a law of this state or by federal law;
    4. [Repealed, § 2 ch 24 SLA 1982.]
    5. commodities in package form when there exists a general consumer usage to express the quantity in some other manner;
    6. concrete aggregates, concrete mixtures, and loose solid materials such as earth, soil, gravel, and crushed stone, when sold by cubic measure; or
    7. unprocessed vegetable and animal fertilizer sold by cubic measure.
  3. The director may adopt reasonable regulations necessary to assure that amounts of commodity sold are determined in accordance with good commercial practice and are so determined and represented as to be accurate and informative.

History. (§ 22 ch 101 SLA 1961; am § 2 ch 24 SLA 1982)

Administrative Code. —

For commodities, see 17 AAC 90, art. 4.

Sec. 45.75.200. Declarations of quantity and origin on packages.

  1. Except as otherwise provided in this chapter, a commodity in package form introduced or delivered for introduction into or received in intrastate commerce, kept for the purpose of sale, or offered or exposed for sale in intrastate commerce shall bear on the outside of the package a definite, plain, and conspicuous declaration of
    1. the net quantity of the contents in terms of weight, measure, or count;
    2. in the case of a package kept, offered, or exposed for sale, or sold in a place other than on the premises where packed, the name and place of business of the manufacturer, packer, or distributor; and
    3. the identity of the commodity in the package unless it can easily be identified through the wrapper.
  2. In the declaration required under (a)(1) of this section the qualifying term “when packed” or other words of similar import, or a term qualifying a unit of weight, measure, or count such as for example “jumbo,” “giant,” “full,” and the like that tends to exaggerate the amount of commodity in a package, may not be used.
  3. Under (a)(1) of this section the director shall, by regulation, establish
    1. reasonable variations or tolerances to be allowed, which may include variations below the declared weight or measure caused by ordinary and customary exposure, only after the commodity is introduced into intrastate commerce, to conditions that normally occur in good distribution practice and that unavoidably result in decreased weight or measure;
    2. exemption as to small packages; and
    3. exemptions as to commodities put up in variable weights or sizes for sale to the consumer intact and either customarily not sold as individual units or customarily weighed or measured at the time of sale to the consumer.
  4. The marking provisions of this section do not apply to unwrapped loaves of bread.

History. (§ 23 ch 101 SLA 1961; am § 2 ch 78 SLA 1969; am § 1 ch 24 SLA 1982)

Administrative Code. —

For commodities, see 17 AAC 90, art. 4.

Sec. 45.75.210. Declarations of unit price on random packages.

In addition to the declarations required by AS 45.75.200 , a commodity in package form, which is one of a lot containing random weights, measures, or counts of the same commodity and bearing the total selling price of the package, shall bear on the outside of the package a plain and conspicuous declaration of the price per single unit of weight, measure, or count.

History. (§ 24 ch 101 SLA 1961)

Administrative Code. —

For commodities, see 17 AAC 90, art. 4.

Sec. 45.75.220. Misleading packages.

A commodity in package form may not be so wrapped, or put in a container so made, formed, or filled as to mislead the purchaser as to the quantity of the contents of the package, and the contents of a container may not fall below the reasonable standard of fill which the director prescribes for the commodity.

History. (§ 25 ch 101 SLA 1961)

Administrative Code. —

For commodities, see 17 AAC 90, art. 4.

Sec. 45.75.225. Advertising packages for sale.

  1. When a commodity in package form is advertised in any manner and the retail price of the package is stated in the advertisement, there shall be closely and conspicuously associated with the statement of price a declaration of the basic quantity of contents of the package as is required by law or regulation to appear on the package.
  2. When the law or regulation requires a dual declaration of net quantity to appear on the package, only the declaration that is required to appear first and without parentheses on the package need appear in the advertisement.
  3. There may not be included as part of the declaration required by this section such qualifying terms as “when packed,” “minimum,” “not less than,” or other terms of similar import nor terms qualifying a unit or weight, measure, or count such as “jumbo,” “giant,” “full,” which tend to exaggerate the amount of commodity in the package.

History. (§ 3 ch 78 SLA 1969)

Cross references. —

For unlawful acts and practices with regard to advertising, see AS 45.50.471 .

Sec. 45.75.230. Misrepresentation of price.

When a commodity or service is sold, or is offered, exposed, or advertised for sale, by weight, measure, or count, the price may not be misrepresented, and the price may not be represented in a manner calculated or tending to mislead or deceive an actual or prospective purchaser. When an advertised, posted, or labeled price per unit of weight, measure, or count includes a fraction of a cent, all elements of the fraction shall be prominently displayed and the numeral expressing the fraction shall be immediately adjacent to, of the same general design and style as, and at least one-half the height and width of the numerals representing the whole cents.

History. (§ 27 ch 101 SLA 1961)

Administrative Code. —

For commodities, see 17 AAC 90, art. 4.

Sec. 45.75.240. Meat, poultry, and seafood.

  1. Except as provided in (b) of this section, meat, meat products, poultry, and seafood except shellfish, offered or exposed for sale or sold as food, shall be offered or exposed for sale and sold by weight.  When meat, poultry, or seafood is combined with or associated with some other food element to form either a distinctive food product or a food combination, the food product or combination shall be offered or exposed for sale and sold by weight.  The quantity representation may be the total weight of the product or combination, and a quantity representation need not be made for each of the several elements of the product or combination.
  2. This section does not apply to meat, meat products, poultry, or seafood that is for immediate consumption on the premises where sold, or as one of several elements comprising a ready-to-eat meal not to be consumed on the premises where sold.

History. (§ 28 ch 101 SLA 1961; am § 4 ch 78 SLA 1969)

Administrative Code. —

For commodities, see 17 AAC 90, art. 4.

Secs. 45.75.250 — 45.75.280. Bread; butter, oleomargarine, and margarine; fluid dairy products; flour, corn meal, and hominy grits. [Repealed, § 2 ch 24 SLA 1982.]

Sec. 45.75.282. Bulk deliveries sold in terms of weight and delivered by vehicle.

  1. When a vehicle delivers to an individual purchaser a commodity in bulk, and it is sold in terms of weight units, the delivery shall be accompanied by a duplicate delivery ticket that must clearly state in ink or by means of other indelible marking equipment, and equal in clarity to type or printing
    1. the name and address of the vendor,
    2. the name and address of the purchaser, and
    3. the net weight of the delivery expressed in pounds, and if the net weight is derived from determinations of gross and tare weights, these weights shall also be stated in terms of pounds.
  2. One of the tickets provided for in (a) of this section shall be retained by the vendor, and the other shall be delivered to the purchaser at the time of delivery of the commodity, or surrendered, on demand, to the director, or the deputy director, or an inspector, or a sealer, or a deputy sealer, who, if retaining it as evidence, shall issue a weight slip in place of it.
  3. If the purchaser carries away the purchase, the vendor is required only to give the purchaser at the time of sale a delivery ticket stating the number of pounds of commodity delivered to the purchaser.

History. (§ 7 ch 78 SLA 1969)

Sec. 45.75.288. Furnace and stove oil.

Furnace and stove oil shall be sold by liquid measure or by net weight. When a delivery of liquid fuel is made in non-package form and in an amount greater than 10 gallons if the sale is by liquid measure, 100 pounds or greater if the sale is by weight, the purchaser shall receive from the vendor a delivery ticket or written statement that clearly states in ink or by means of other indelible marking equipment equal in clarity to type or printing

  1. the name and address of the vendor;
  2. the name and address of the purchaser;
  3. the identity of the type of fuel delivered;
  4. the price per gallon or per pound of the fuel delivered;
  5. if a sale is by liquid measure, the liquid volume of the delivery, together with any meter readings from which the liquid volume was computed, expressed in terms of the gallon and its binary or decimal subdivisions; and
  6. if a sale by weight, the net weight of the delivery, together with any weighing scale readings from which the net weight was computed, expressed in terms of tons or pounds avoirdupois.

History. (§ 8 ch 78 SLA 1969)

Sec. 45.75.290. Coal, coke, and charcoal.

  1. Coal, coke, and charcoal shall be sold by weight.  Unless the fuel is delivered to the purchaser in package form, each delivery of coal, coke, or charcoal to an individual purchaser shall be accompanied by duplicate delivery tickets on which, in ink or other indelible substance, there are clearly stated
    1. the name and address of the vendor;
    2. the name and address of the purchaser; and
    3. the net weight of the delivery and the gross and tare weights from which the net weight is computed, each expressed in pounds.
  2. One of the tickets provided for under (a) of this section shall be retained by the vendor and the other shall be delivered to the purchaser at the time of delivery of the fuel, or shall be surrendered, on demand, to the director, or the deputy director or an inspector, or a sealer or deputy sealer, who, if retaining it as evidence, shall issue a weight slip in place of it for delivery to the purchaser.  If the purchaser carries away the purchase, the vendor is required only to give to the purchaser at the time of sale a delivery ticket stating the number of pounds of fuel delivered to the purchaser.

History. (§ 33 ch 101 SLA 1961)

Sec. 45.75.300. Textile products.

It is unlawful to keep for the purpose of sale, offer or expose for sale, or sell textile yard goods put up or packaged in advance of sale in a bolt or roll, or any other textile product put up or packaged in advance of sale in any other unit, for wholesale or retail sale, unless the bolt or roll, or other unit, is definitely, plainly, and conspicuously marked to show its net measure in terms of yards or its net weight, in terms of avoirdupois pounds or ounces, subject to the following limitations and requirements:

  1. a unit of twine or cordage may be marked to show its net measure in terms of feet; readywound bobbins not sold separately are not required to be individually marked, but the package containing the bobbins shall be marked to show the number of bobbins contained in it and the net weight or measure of the thread on each bobbin; a unit of sewing, basting, mending, darning, crocheting, tatting, hand-knitting, or embroidery thread or yarn, except nylon hand-knitting yarn, that is not composed in whole or in part of wool, the net weight of which is less than two ounces avoirdupois, shall be marked to show its net measure in terms of yards as unwound from the ball or from the spool or other holder; a retail unit of a textile product sold only for household use consisting of a package containing two or more similar individual units that are not sold separately shall be marked to show the number of individual units in the package and the net weight or net measure of the product in each individual unit, but this does not apply where the individual units are separately marked; a unit of yarn, composed in whole or in part of wool, sold to consumers for handiwork, shall be marked to show the net weight of the yarn, except that any such unit of tapestry, mending, or embroidery yarn, the net measure of which does not exceed 50 yards, may be marked to show its linear measure only;
  2. the marking required by this section shall in all cases be in combination with the name and place of business of the manufacturer, packer, or distributor of the product, or a trademark, symbol, brand, or other mark that identifies the manufacturer, packer, or distributor;
  3. reasonable tolerances shall be permitted, and these must be included in regulations for the enforcement of this section that are adopted by the director;
  4. this section does not apply to the following textile products when sold at wholesale in bulk by net weight: cordage, agricultural bag sewing threads, twines, yarns that are to be processed, and yarns that are to be industrially converted into end-use products.

History. (§ 34 ch 101 SLA 1961)

Sec. 45.75.310. Berries and small fruits. [Repealed, § 2 ch 24 SLA 1982.]

Sec. 45.75.320. Construction of contracts.

Fractional parts of a unit of weight or measure mean like fractional parts of the value of the unit as prescribed or defined in AS 45.75.010 and 45.75.390 , and all contracts concerning the sale of commodities and services shall be construed in accordance with this requirement.

History. (§ 36 ch 101 SLA 1961)

Article 4. Enforcement.

Sec. 45.75.330. Injunction.

The director may apply to a court for a temporary or permanent injunction restraining a person from violating a provision of this chapter.

History. (§ 40 ch 101 SLA 1961)

Sec. 45.75.340. Presumptive evidence.

For the purposes of this chapter, proof of the existence of a weight or measure or a weighing or measuring device in or about a building, enclosure, stand, or vehicle in which or from which it is shown that buying or selling is commonly carried on is, in the absence of conclusive evidence to the contrary, presumptive proof of the regular use of the weight or measure or weighing or measuring device for commercial purposes and of such use by the person in charge of the building, enclosure, stand, or vehicle.

History. (§ 41 ch 101 SLA 1961)

Sec. 45.75.350. Validity of prosecutions.

Prosecutions for violation of this chapter are valid and proper notwithstanding the existence of another valid general or specific law of this state dealing with matters that may be the same as or similar to those covered by this chapter.

History. (§ 42 ch 101 SLA 1961)

Article 5. General Provisions.

Sec. 45.75.360. Hindering or obstructing officer and penalty. [Repealed, § 5 ch 85 SLA 1987.]

Sec. 45.75.370. Impersonation of officer and penalties. [Repealed, § 21 ch 166 SLA 1978. For current law, see AS 11.56.830.]

Sec. 45.75.380. Offenses and penalties.

  1. A person commits a violation subject to the penalty specified in AS 12.55.035(b)(7) if the person does one or more of the following acts:
    1. uses or has in possession for the purpose of using for a commercial purpose specified in AS 45.75.080 , sells, offers, or exposes for sale, or hire, or has in possession for the purpose of selling or hiring, an incorrect weight or measure or a device or instrument used to or calculated to falsify a weight or measure;
    2. uses or has in possession for current use, in buying or selling a commodity or thing, or for hire or award, or in the computation of a basic charge or payment for services rendered on the basis of weight or measurement, or in the determination of weight or measurement when a charge is made for determination, a weight or measure that has not been tested and sealed by the appropriate authority within one year, unless
      1. the person gives written notice to the appropriate authority to the effect that the weight or measure is available for examination, or is due for reexamination, as the case may be;
      2. the person receives specific written permission to use the weight or measure from the appropriate authority; or
      3. the weight or measure is exempt from sealing or annual testing requirements by AS 45.75.080 or by a regulation adopted under AS 45.75.050 ;
    3. disposes of a rejected or condemned weight or measure in a manner contrary to law or regulation;
    4. removes from a weight or measure, contrary to law or regulation, a tag, seal, or mark placed on it by the appropriate authority;
    5. sells or offers for sale less than the quantity the person represents of a commodity, thing, or service;
    6. takes more than the quantity the person represents of a commodity, thing, or service when, as buyer, the person furnished the weight or measure that the seller used to determine the amount of the commodity, thing, or service;
    7. keeps for the purpose of sale, advertises, or offers for sale, or sells a commodity, thing, or service in a condition or manner contrary to law or regulation;
    8. uses in retail trade, except in the preparation of packages put up in advance of sale and of medical prescriptions, a weight or measure that is not so positioned that a customer may accurately read, from a position that may reasonably be assumed by a customer, its indications and observe the weighing or measuring operation;
    9. hinders or obstructs the director, an inspector, a sealer, or a deputy sealer in the performance of official duties under this chapter;
    10. violates a provision of an overweight or oversize vehicle permit issued under AS 19.10.060(b) ;
    11. violates a weight, load, or size limitation established under AS 19.10.060 or a regulation adopted under AS 19.05.020 , AS 19.10.060 , or AS 45.75.050 (b)(5);
    12. violates a provision of this chapter or a regulation adopted under this chapter for which a specific penalty is not prescribed.
  2. Notwithstanding the maximum fine for a violation provided under (a) of this section, a person who does one or more of the acts in (a)(10) or (11) of this section, shall pay a penalty as follows:
    1. if the vehicle is 1,001 — 2,000 pounds overweight, the fine is $100;
    2. if the vehicle is 2,001 — 4,000 pounds overweight, the fine is $.07 for each pound over the weight limitation;
    3. if the vehicle is 4,001 — 6,000 pounds overweight, the fine is $.09 for each pound over the weight limitation;
    4. if the vehicle is 6,001 — 10,000 pounds overweight, the fine is $.12 for each pound over the weight limitation;
    5. if the vehicle is 10,001 or more pounds overweight, the fine is $.15 for each pound over the weight limitation.

History. (§ 39 ch 101 SLA 1961; am §§ 3, 4 ch 85 SLA 1987; am E.O. No. 98 § 15 (1997); am § 20 ch 48 SLA 1998; am § 3 ch 131 SLA 2002; am § 2 ch 81 SLA 2006)

Cross references. —

For the effect of the 2006 reenactment of (b) of this section on Rule 43.6, Alaska Rules of Administration, as those relate to the maximum fine for overweight vehicle violations, see §§ 3 and 4, ch. 81, SLA 2006, in the 2006 Temporary and Special Acts.

Administrative Code. —

For weighing and measuring device registration and fees, see 17 AAC 90, art. 9.

For definitions, see 17 AAC 90, art. 10.

Editor’s notes. —

Section 5(b), ch. 81, SLA 2006, provides that the 2006 reenactment of (b) of this section applies “to an offense committed on or after June 29, 2006.”

Notes to Decisions

Jury trial. —

Because the magistrate had no authority to take or limit defendant’s commercial driver’s license, defendant was properly tried in the district court under the procedures established in Alaska Dist. Ct. R. Crim. P. 8, and defendant was not entitled to a jury trial. Davis v. State, 235 P.3d 1017 (Alaska Ct. App. 2010).

Sec. 45.75.390. Definitions.

In this chapter,

  1. “barrel,” when used in connection with fermented liquor, means a unit of 31 gallons;
  2. “commodity in package form” means a commodity put up or packaged in any manner in advance of sale in units suitable for wholesale or retail sale, but does not include an auxiliary shipping container enclosing packages that individually conform to the requirements of this chapter; an individual item or lot of a commodity not in package form, but on which there is marked a selling price based on an established price per unit of weight or of measure, is a commodity in package form;
  3. “consumer package” or “package of consumer commodity” means a commodity in package form that is customarily produced or distributed for sale through retail sales agencies or instrumentalities for consumption by individuals or use by individuals for the purposes of personal care or in the performance of services ordinarily rendered in or about the household or in connection with personal possessions;
  4. “cord,” when used in connection with wood intended for fuel purposes, means the amount of wood that is contained in a space of 128 cubic feet when the wood is ranked and well stowed;
  5. “director” means the state director of weights and measures and “deputy director” means the deputy state director of weights and measures;
  6. “inspector” means a state inspector of weights and measures;
  7. “intrastate commerce” means commerce or trade that is begun, carried on, and completed wholly within the limits of the state;
  8. “nonconsumer package” or “package of nonconsumer commodity” means a commodity in package form other than a consumer package, and particularly a package designed solely for industrial or institutional use or for wholesale distribution only;
  9. “sealer” means a sealer of weights and measures and “deputy sealer” means a deputy sealer of weights and measures of a city;
  10. “sell” includes barter and exchange;
  11. “ton” means a unit of 2,000 pounds avoirdupois weight;
  12. “weight” in connection with a commodity means net weight; when a commodity is sold on the basis of weight, the net weight of the commodity shall be used, and all contracts concerning the commodity shall be so construed;
  13. “weight and measure” means every weight and measure, instrument and device for weighing and measuring, and every appliance and accessory associated with an instrument and device.

History. (§§ 2, 4, 26 ch 101 SLA 1961; am § 9 ch 78 SLA 1969; am § 1 ch 72 SLA 1970)

Revisor’s notes. —

Reorganized in 1986 to alphabetize the defined terms.

Sec. 45.75.400. Short title.

This chapter may be cited as the Weights and Measures Act.

History. (§ 1 ch 101 SLA 1961)

Chapter 77. Foreign Trade Zones.

Sec. 45.77.010. Application for establishment of foreign trade zone.

  1. A public corporation may apply for the privilege of establishing, operating, and maintaining a foreign trade zone or zones in the state as provided in 19 U.S.C. secs. 81a — 81u (Foreign Trade Zones Act), and if the application is granted, may establish, operate, and maintain the zone in accordance with applicable law.
  2. With the approval of the commissioner of commerce, community, and economic development, any private corporation may apply as described in (a) of this section, and, if the application is granted, may establish, operate, and maintain a foreign trade zone.
  3. Nothing in this section prevents a successful applicant from entering into a contract for services for the operation or maintenance of the foreign trade zone.

History. (§ 1 ch 95 SLA 1980; am § 1 ch 146 SLA 1988)

Revisor’s notes. —

In 1999, in (b) of this section, “commissioner of commerce and economic development” was changed to “commissioner of community and economic development” in accordance with § 88, ch. 58, SLA 1999.

In 2004, in (b) of this section, “commissioner of community and economic development” was changed to “commissioner of commerce, community, and economic development”, in accordance with § 3, ch. 47, SLA 2004.

Sec. 45.77.020. Definitions.

In this chapter,

  1. “foreign trade zone” means a foreign trade zone established under 19 U.S.C. secs. 81a — 81u (Foreign Trade Zones Act), as amended, or any laws of the United States enacted as replacements for those provisions;
  2. “private corporation” means a corporation, other than a public corporation, formed under the laws of the State of Alaska for the purpose of establishing, operating, and maintaining a foreign trade zone;
  3. “public corporation” means the State of Alaska, a political subdivision of the state, a public authority, commission, agency, or corporate instrumentality of the state or of a political subdivision of the state, or any combination of these entities.

History. (§ 2 ch 146 SLA 1988)

Chapter 80. Deceptive Advertising.

Secs. 45.80.010 — 45.80.060. [Renumbered as AS 45.50.600 — 45.50.606.]

Chapter 81. Business Loan and Grant Programs.

Administrative Code. —

For Alaska new business incentive program, see 3 AAC 59.

Article 1. New Business Incentive Program.

Sec. 45.81.010. New business incentive fund.

There is established in the department the new business incentive fund. Up to $3,000,000 may be appropriated to the fund each fiscal year. The department may use money in the fund for new business incentive grants. On June 30 of each fiscal year, the unexpended and unobligated balance in the fund lapses into the general fund.

History. (§ 2 ch 8 SLA 1998)

Administrative Code. —

For Alaska new business incentive program, see 3 AAC 59.

Sec. 45.81.020. Eligibility for grants.

  1. A new business or a business that is opening a new branch in the state is eligible for a new business incentive grant if
    1. the business is primarily engaged in manufacturing a product for export outside of the state;
    2. the business will not directly compete with an existing business that is located in the state as determined by the department;
    3. for a business located in a municipality, the municipality has provided support to the business in a form and in an amount acceptable to the department;
    4. the business is primarily financed by the private sector; and
    5. the business has been recommended as complying with the requirements for a business incentive grant by the Alaska Industrial Development and Export Authority.
  2. The department shall prescribe by regulation the standards for new business incentive grant eligibility and the form and procedure for submitting grant applications. Subject to the availability of money in the new business incentive fund, the department may award a grant to an eligible applicant in an amount that does not exceed the amount recommended by the Alaska Industrial Development and Export Authority for that applicant.

History. (§ 2 ch 8 SLA 1998)

Administrative Code. —

For Alaska new business incentive program, see 3 AAC 59.

Sec. 45.81.030. Use of grant money.

After awarding a new business incentive grant, the department may pay money from the grant to the recipient business only as reimbursement for one or more of the following costs incurred and paid by the business:

  1. cost of relocating key personnel and of moving and installing equipment and initial inventory;
  2. up to 50 percent of the cost of site preparation and installation of utilities for a new facility;
  3. work force training costs for a period of up to 36 months in an amount not to exceed $5,000 for each employee receiving training during a 12-month period if the costs are not covered by another governmental program;
  4. up to 50 percent of the costs of business feasibility analyses that relate to situations unique to the state, market studies applicable to the state, and business facility designs necessary to address conditions in the state.

History. (§ 2 ch 8 SLA 1998)

Administrative Code. —

For Alaska new business incentive program, see 3 AAC 59.

Sec. 45.81.040. Grant conditions.

  1. A business that receives a new business incentive grant must be operating on the date the grant is awarded and must continue to operate in the state for at least five years after the date the grant is awarded or must, within 90 days after ceasing to operate, repay the grant money together with interest on the money in an amount established by the department. A business that is a branch or subsidiary of another business may not receive a grant unless that other business agrees, in a form acceptable to the department, to be responsible for the obligation to repay grant money and interest under this subsection.
  2. The department may set additional terms and conditions for the award of new business incentive grants and for the payment of grant money. The terms and conditions may include requirements for the repayment of grant money even though repayment is not required under (a) of this section.

History. (§ 2 ch 8 SLA 1998)

Administrative Code. —

For Alaska new business incentive program, see 3 AAC 59.

Sec. 45.81.050. Definition.

For purposes of AS 45.81.010 45.81.050 , “department” means the Department of Commerce, Community, and Economic Development.

History. (§ 2 ch 8 SLA 1998)

Revisor’s notes. —

In 1999, in this section, “Department of Commerce and Economic Development” was changed to “Department of Community and Economic Development” in accordance with § 88, ch. 58, SLA 1999.

In 2004, in this section, “Department of Community and Economic Development” was changed to “Department of Commerce, Community, and Economic Development”, in accordance with § 3, ch. 47, SLA 2004.

Administrative Code. —

For Alaska new business incentive program, see 3 AAC 59.

Article 2. Tourism Revolving Loan Fund.

Sec. 45.81.100. Creation of a tourism revolving fund.

  1. There is created in the Department of Commerce, Community, and Economic Development a tourism revolving fund.  All principal and interest payments, and money chargeable to principal or interest that is collected through liquidation by foreclosure or other process on loans made under AS 45.81.100 45.81.190 , shall be paid into the tourism revolving fund.
  2. Money in the fund may be used by the legislature to make appropriations for costs of administering AS 45.81.100 45.81.190 .

History. (§ 1 ch 171 SLA 1972; am §§ 82, 83 ch 36 SLA 1990)

Revisor’s notes. —

Formerly AS 45.90.010. Renumbered in 2006, at which time “AS 45.81.100 45.81.190 ” was substituted for “this chapter”.

In 1999, in (a) of this section, “Department of Commerce and Economic Development” was changed to “Department of Community and Economic Development” in accordance with § 88, ch. 58, SLA 1999.

In 2004, in (a) of this section, “Department of Community and Economic Development” was changed to “Department of Commerce, Community, and Economic Development”, in accordance with § 3, ch. 47, SLA 2004.

Cross references. —

For annual appropriation of cash balance attributable to loans owned by the fund, see § 3, ch. 156, SLA 1984 in the Temporary and Special Acts.

Sec. 45.81.110. Special account established.

  1. There is established as a special account within the tourism revolving fund the foreclosure expense account. This account is established as a reserve from fund equity.
  2. The commissioner of commerce, community, and economic development may expend money credited to the foreclosure expense account when necessary to protect the state’s security interest in collateral on loans made under AS 45.81.120 or to defray expenses incurred during foreclosure proceedings after a default by an obligor.

History. (§ 27 ch 79 SLA 1985)

Revisor’s notes. —

Formerly AS 45.90.015. Renumbered in 2006, at which time “AS 45.81.120 ” was substituted for “AS 45.90.020”.

In 1999, in (b) of this section, “commissioner of commerce and economic development” was changed to “commissioner of community and economic development” in accordance with § 88, ch. 58, SLA 1999.

In 2004, in (b) of this section, “commissioner of community and economic development” was changed to “commissioner of commerce, community, and economic development”, in accordance with § 3, ch. 47, SLA 2004.

Sec. 45.81.120. Powers and duties of the Department of Commerce, Community, and Economic Development.

  1. The department may
    1. make loans to a business directly involved in the tourist industry;
    2. designate agents and delegate powers to them as is necessary;
    3. adopt regulations necessary to carry out its functions, including regulations to establish reasonable fees for services provided and charges for collecting the fees;
    4. establish amortization plans for the repayment of loans not to exceed 20 years;
    5. collect the fees and collection charges established under this subsection.
  2. [Repealed, § 84 ch 58 SLA 1999.]

History. (§ 1 ch 171 SLA 1972; am § 84 ch 36 SLA 1990; am § 84 ch 58 SLA 1999)

Revisor’s notes. —

Formerly AS 45.90.020. Renumbered in 2006.

Section 71(2), ch. 106, SLA 1980 provides that no further loans may be made under this section after July 1, 1981.

Administrative Code. —

For repossessed property, see 3 AAC 77.

Sec. 45.81.130. Limitations on loans.

  1. State participation in a loan to a business may not be more than $3,000,000.
  2. The loan shall be secured by acceptable collateral and may not exceed 75 percent of the appraised value of the collateral offered as security.
  3. The rate of interest may not exceed nine and one-half percent a year on the unpaid balance of the state’s share of the loan.
  4. A loan of $150,000 or more under AS 45.81.100 45.81.190 must be participated in by a financial institution in an amount which is not less than 20 percent of the total amount of the loan. A loan of less than $150,000 does not require participation by a financial institution.
  5. The participating financial institution shall administer and service the loan for a reasonable fee not exceeding one-half of one percent.
  6. The lien of the state is a first lien to the extent of its portion of the total loan and the participating financial institution shall have a first lien to the extent of its portion of the total loan.

History. (§ 1 ch 171 SLA 1972; am §§ 1, 2 ch 4 SLA 1973; am § 5 ch 139 SLA 1977; am § 23 ch 72 SLA 1979)

Revisor’s notes. —

Formerly AS 45.90.030. Renumbered in 2006, at which time “AS 45.81.100 45.81.190 ” was substituted for “this chapter”.

Sec. 45.81.140. Sale or transfer of mortgages and notes.

  1. The commissioner of commerce, community, and economic development may sell or transfer at par value or at a premium or discount to any bank or other private purchaser for cash or other consideration the mortgages and notes held by the Department of Commerce, Community, and Economic Development as security for loans made under AS 45.81.100 45.81.190 .
  2. [Repealed by § 14 ch 122 SLA 1980.]

History. (§ 1 ch 171 SLA 1972; am § 1 ch 141 SLA 1974; am § 24 ch 72 SLA 1979; am § 14 ch 122 SLA 1980)

Revisor’s notes. —

Formerly AS 45.90.040. Renumbered in 2006, at which time “AS 45.81.100 45.81.190 ” was substituted for “this chapter”.

In 1999, in this section, “commissioner of commerce and economic development” was changed to “commissioner of community and economic development” and “Department of Commerce and Economic Development” was changed to “Department of Community and Economic Development” in accordance with § 88, ch. 58, SLA 1999.

In 2004, in this section, “commissioner of community and economic development” was changed to “commissioner of commerce, community, and economic development” and “Department of Community and Economic Development” was changed to “Department of Commerce, Community, and Economic Development”, in accordance with § 3, ch. 47, SLA 2004.

Sec. 45.81.190. Disposal of property acquired by default or foreclosure.

The Department of Commerce, Community, and Economic Development shall dispose of property acquired through default or foreclosure of a loan made under AS 45.81.100 45.81.190 . Disposal shall be made in a manner that serves the best interests of the state, and may include the amortization of payments over a period of years.

History. (§ 28 ch 79 SLA 1985)

Revisor’s notes. —

Formerly AS 45.90.050. Renumbered in 2006, at which time “AS 45.81.100 45.81.190 ” was substituted for “this chapter”.

In 1999, in this section, “Department of Commerce and Economic Development” was changed to “Department of Community and Economic Development” in accordance with § 88, ch. 58, SLA 1999.

In 2004, in this section, “Department of Community and Economic Development” was changed to “Department of Commerce, Community, and Economic Development”, in accordance with § 3, ch. 47, SLA 2004.

Article 3. Small Business Loans.

Administrative Code. —

For small business loan assumptions, see 3 AAC 86.

Sec. 45.81.200. Powers and duties of Department of Commerce, Community, and Economic Development in general.

  1. The Department of Commerce, Community, and Economic Development shall formulate general policies and adopt regulations necessary to carry out the provisions of AS 45.81.200 45.81.290 , including regulations to establish fees for services provided and charges for collecting the fees.  The department may collect the fees and collection charges established.
  2. The department may hold hearings and subpoena witnesses and documents, and administer oaths in connection with hearings.
  3. The department shall
    1. cooperate with the state and its political subdivisions and agencies;
    2. adopt regulations necessary for the conduct of its business and for carrying out the provisions of AS 45.81.200 45.81.290 , and make necessary regulations to maintain such standards;
    3. require bonds and undertakings from persons employed by it as shall in its judgment be necessary, and pay the premiums on them;
    4. establish such regional and local offices and such advisory groups as may be necessary or considered expedient to carry out or assist in carrying out its duties and authority.

History. (§ 8 ch 109 SLA 1971; am § 109 ch 218 SLA 1976; am § 85 ch 36 SLA 1990)

Revisor’s notes. —

Formerly AS 45.95.010 . Renumbered in 2006, at which time “AS 45.81.200 45.81.290 ” was substituted for “this chapter”.

In 1999, in this section, “Department of Commerce and Economic Development” was changed to “Department of Community and Economic Development” in accordance with § 88, ch. 58, SLA 1999.

In 2004, in (a) of this section, “Department of Community and Economic Development” was changed to “Department of Commerce, Community, and Economic Development”, in accordance with § 3, ch. 47, SLA 2004.

Notes to Decisions

Cited in

State v. First Nat'l Bank, 629 P.2d 78 (Alaska 1981).

Sec. 45.81.210. Small business loans.

  1. The commissioner shall, under regulations and policies adopted by the commissioner, make small business loans to acquire, finance, or refinance or equip businesses, including farming, mining, and fishing, not exceeding $500,000. The loans shall be secured by acceptable collateral and may not exceed 75 percent of the appraised value of the collateral offered as security.  The rate of interest may not exceed nine and one-half percent a year on the unpaid balance. For the purposes of this subsection business equipment includes, but is not limited to, fire protection systems approved under AS 18.70.081 and farming equipment.
  2. [Repealed, § 14 ch 122 SLA 1980.]
  3. [Repealed, § 108 ch 59 SLA 1982.]
  4. Money loaned shall be delivered to the borrower as provided in AS 37.25.050 , vouchered in the manner prescribed for state disbursing officers, and charged against the small business revolving loan fund. Each voucher shall be approved by the commissioner or a bonded deputy authorized to act as a certifying officer. Upon repayment of loans by installments, or otherwise, in accordance with the prescribed terms, or upon liquidation by foreclosure or other process, or upon receipt of interest, the money so received shall be turned over to the commissioner of revenue for deposit in the small business revolving loan fund.
  5. The commissioner may not disqualify an applicant for, or prejudice an applicant’s privilege to receive, a loan to purchase and install a fire protection system solely because of a loan already made to the applicant under AS 45.81.200 45.81.290 .

History. (§ 8 ch 109 SLA 1971; am § 1 ch 103 SLA 1974; am § 110 ch 218 SLA 1976; am § 6 ch 139 SLA 1977; am § 25 ch 72 SLA 1979; am §§ 6, 7 ch 45 SLA 1980; am § 14 ch 122 SLA 1980; am § 108 ch 59 SLA 1982; am § 86 ch 36 SLA 1990; am § 27 ch 175 SLA 2004)

Revisor’s notes. —

Formerly AS 45.95.020. Renumbered in 2006, at which time “AS 45.81.200 45.81.290 ” was substituted for “this chapter”.

Section 71(2), ch. 106, SLA 1980 provides that no further loans may be made under this section after July 1, 1981.

Sec. 45.81.220. Sale or transfer of mortgages and notes.

  1. The commissioner may sell or transfer at par value or at a premium or discount to any bank or other private purchaser for cash or other consideration the mortgages and notes held by the Department of Commerce, Community, and Economic Development as security for loans made under AS 45.81.200 45.81.290 .
  2. [Repealed, § 33 ch 141 SLA 1988.]

History. (§ 8 ch 109 SLA 1971; am § 112 ch 218 SLA 1976; am § 26 ch 72 SLA 1979; am § 33 ch 141 SLA 1988)

Revisor’s notes. —

Formerly AS 45.95.040 . Renumbered in 2006, at which time “AS 45.81.200 45.81.290 ” was substituted for “this chapter”.

In 1999, in (a) of this section, “Department of Commerce and Economic Development” was changed to “Department of Community and Economic Development” in accordance with § 88, ch. 58, SLA 1999.

In 2004, in this section, “Department of Community and Economic Development” was changed to “Department of Commerce, Community, and Economic Development”, in accordance with § 3, ch. 47, SLA 2004.

Administrative Code. —

For repossessed property, see 3 AAC 77.

Sec. 45.81.230. Disposal of property acquired by default or foreclosure.

The Department of Commerce, Community, and Economic Development shall dispose of property acquired through default or foreclosure of a loan made under AS 45.81.200 45.81.290 . Disposal shall be made in a manner that serves the best interests of the state, and may include the amortization of payments over a period of years.

History. (§ 29 ch 79 SLA 1985)

Revisor’s notes. —

Formerly AS 45.95.055 . Renumbered in 2006, at which time “AS 45.81.200 45.81.290 ” was substituted for “this chapter”.

In 1999, in this section, “Department of Commerce and Economic Development” was changed to “Department of Community and Economic Development” in accordance with § 88, ch. 58, SLA 1999.

In 2004, in this section, “Department of Community and Economic Development” was changed to “Department of Commerce, Community, and Economic Development”, in accordance with § 3, ch. 47, SLA 2004.

Sec. 45.81.240. Creation of fund.

  1. There is created the small business revolving loan fund to carry out the purposes of AS 45.81.200 45.81.290 .  This fund shall be used for no other purpose.
  2. Money in the fund may be used by the legislature to make appropriations for costs of administering AS 45.81.200 45.81.290 .

History. (§ 8 ch 109 SLA 1971; am § 87 ch 36 SLA 1990)

Revisor’s notes. —

Formerly AS 45.95.060. Renumbered in 2006, at which time “AS 45.81.200 45.81.290 ” was substituted for “this chapter”.

Cross references. —

For annual appropriation of cash balance attributable to loans owned by the fund, see § 4, ch. 156, SLA 1984 in the Temporary and Special Acts.

Sec. 45.81.250. Special account established.

  1. There is established as a special account within the small business revolving loan fund the foreclosure expense account. This account is established as a reserve from fund equity.
  2. The commissioner may expend money credited to the foreclosure expense account when necessary to protect the state’s security interest in collateral on loans made under AS 45.81.210 or to defray expenses incurred during foreclosure proceedings after a default by an obligor.

History. (§ 30 ch 79 SLA 1985)

Revisor’s notes. —

Formerly AS 45.95.065. Renumbered in 2006, at which time “AS 45.81.210 ” was substituted for “AS 45.95.020”.

Sec. 45.81.260. Eligibility for loans.

A person is eligible for a loan under AS 45.81.200 45.81.290 if

  1. the person can establish or demonstrate good character, capacity for financial responsibility, ability to provide sufficient collateral and knowledge of Alaska economic conditions;
  2. the person is a resident of the state; and
  3. in the judgment of the Department of Commerce, Community, and Economic Development
    1. the business shows a definite potential for growth;
    2. the borrower will be able to repay the loan; and
    3. the loan will potentially create more jobs and provide additional services in the community.

History. (§ 8 ch 109 SLA 1971; am § 1 ch 17 SLA 1974; am § 114 ch 218 SLA 1976)

Revisor’s notes. —

Formerly AS 45.95.070. Renumbered in 2006, at which time “AS 45.81.200 45.81.290 ” was substituted for “this chapter”.

In 1999, in this section, “Department of Commerce and Economic Development” was changed to “Department of Community and Economic Development” in accordance with § 88, ch. 58, SLA 1999.

In 2004, in this section, “Department of Community and Economic Development” was changed to “Department of Commerce, Community, and Economic Development”, in accordance with § 3, ch. 47, SLA 2004.

Sec. 45.81.290. Definition.

In AS 45.81.200 45.81.290 , “commissioner” means the commissioner of commerce, community, and economic development.

History. (§ 115 ch 218 SLA 1976)

Revisor’s notes. —

Formerly AS 45.95.080. Renumbered in 2006, at which time “AS 45.81.200 45.81.290 ” was substituted for “this chapter”.

In 1999, in this section, “commissioner of commerce and economic development” was changed to “commissioner of community and economic development” in accordance with § 88, ch. 58, SLA 1999.

In 2004, in this section, “commissioner of community and economic development” was changed to “commissioner of commerce, community, and economic development”, in accordance with § 3, ch. 47, SLA 2004.

Chapter 85. Real Estate Surety Fund.

[Renumbered as AS 08.88.450 08.88.500 .]

Chapter 86. Water Resources Revolving Loan Fund.

[Repealed, § 44 ch 83 SLA 1980.]

Chapter 87. Bulk Fuel.

[Repealed, E.O. No. 75 § 5 (1989).]

Chapter 88. Energy Loan and Grant Programs.

Administrative Code. —

For alternative energy loans, see 3 AAC 78.

Article 1. Alternative Energy Revolving Loan Fund.

Sec. 45.88.010. Fund established.

  1. There is established in the Department of Commerce, Community, and Economic Development the alternative energy conservation revolving loan fund to carry out the purposes of AS 45.88.010 45.88.090 . Loans made under AS 45.88.010 45.88.090 are to be used
    1. to develop means of energy production utilizing one or more alternative energy systems; and
    2. to purchase, construct, and install energy conservation improvements in commercial buildings.
  2. Money in the fund may be used by the legislature to make appropriations for costs of administering AS 45.88.010 45.88.090 .
  3. [Repealed, § 38 ch 83 SLA 2010.]
  4. Notwithstanding any other provision in AS 45.88.010 45.88.090 , a multifuel heating system that uses the combination of wood or fossil fuel for fuel does qualify under this loan fund.
  5. The alternative energy conservation revolving loan fund consists of
    1. money appropriated to the fund by the legislature;
    2. gifts, bequests, or contributions from other sources;
    3. principal and interest payments or other income earned on loans or investments in the fund; and
    4. money chargeable to principal or interest that is collected through liquidation by foreclosure or other processes on loans made under AS 45.88.010 45.88.090 .

History. (§ 1 ch 29 SLA 1978; am §§ 5, 8 ch 56 SLA 1979; am § 28 ch 83 SLA 1980; am § 74 ch 36 SLA 1990; am §§ 20, 21, 38 ch 83 SLA 2010)

Revisor’s notes. —

Subsection (d) was formerly AS 45.88.500(b). Renumbered in 2006, at which time “AS 45.88.010 45.88.090 ” was substituted for “this chapter”.

In 1999, in (a) of this section, “Department of Commerce and Economic Development” was changed to “Department of Community and Economic Development” in accordance with § 88, ch. 58, SLA 1999.

In 2004, in (a) of this section, “Department of Community and Economic Development” was changed to “Department of Commerce, Community, and Economic Development”, in accordance with § 3, ch. 47, SLA 2004.

Effect of amendments. —

The 2010 amendment, effective September 14, 2010, rewrote (a); repealed (c); added (e).

Sec. 45.88.015. Special account established.

  1. There is established, as a special account within the revolving loan fund established under AS 45.88.010 , the foreclosure expense account. This account is established as a reserve from fund equity.
  2. The commissioner of commerce, community, and economic development may expend money credited to the foreclosure expense account when necessary to protect the state’s security interest in collateral on loans made under AS 45.88.020 or to defray expenses incurred during foreclosure proceedings after a default by an obligor.

History. (§ 23 ch 79 SLA 1985)

Revisor’s notes. —

In 1999, in (b) of this section, “commissioner of commerce and economic development” was changed to “commissioner of community and economic development” in accordance with § 88, ch. 58, SLA 1999.

In 2004, in (b) of this section, “commissioner of community and economic development” was changed to “commissioner of commerce, community, and economic development”, in accordance with § 3, ch. 47, SLA 2004.

Sec. 45.88.020. Powers and duties of the department in administering the fund.

  1. The department may
    1. make loans for the purchase, construction, and installation, in commercial buildings that are located in the state, of
      1. alternative energy systems; and
      2. energy conservation improvements;
    2. adopt regulations necessary to carry out the provisions of AS 45.88.010 45.88.090 , including regulations to establish reasonable fees for services provided and charges for collecting the fees;
    3. collect the fees and collection charges established under this subsection.
  2. The department shall develop eligibility standards for loans made under AS 45.88.010 45.88.090 and adopt guidelines for the determination of loan terms.
  3. The department may not make a loan under AS 45.88.010 45.88.090 to a person who has a past due child support obligation established by court order or by the child support services agency under AS 25.27.160 25.27.220 at the time of application.

History. (§ 1 ch 29 SLA 1978; am §§ 6, 8 ch 56 SLA 1979; am § 29 ch 83 SLA 1980; am § 9 ch 116 SLA 1986; am § 75 ch 36 SLA 1990; am § 22 ch 83 SLA 2010)

Revisor’s notes. —

In 2004, “child support enforcement division” was changed to “child support services agency” in (c) of this section in accordance with § 12(a), ch. 107, SLA 2004, and to correct a manifest error. In 2006, “AS 45.88.010 45.88.090 ” was substituted for “this chapter”.

Administrative Code. —

For repossessed property, see 3 AAC 77.

For alternative energy loans, see 3 AAC 78.

Effect of amendments. —

The 2010 amendment, effective September 14, 2010, in (a)(1), added the (A) and (B) designations, added “, in commercial buildings that are located in the state,” following “make loans for the purchase, construction, and installation”, added (a)(1)(B), and made a related change.

Sec. 45.88.025. Eligibility.

To be eligible for a loan under AS 45.88.010 45.88.090 , an applicant must

  1. physically reside in the state and maintain a domicile in the state during 12 consecutive months before the date of application for a loan and may not have
    1. declared or established residency in another state; or
    2. received residency or a benefit based on residency from another state;
  2. be at least 51 percent owned by individuals described in (1) of this section if the applicant is a corporation, joint venture, or partnership; or
  3. be a nonprofit organization under AS 10.20.

History. (§ 23 ch 83 SLA 2010)

Effective dates. —

Section 23, ch. 83, SLA 2010, which enacted this section, is effective September 14, 2010.

Sec. 45.88.030. Loan terms.

  1. A loan made under AS 45.88.010 45.88.090 may not exceed $50,000. If the requested loan amount exceeds $30,000, the applicant must deliver to the department a document from a financial institution stating that
    1. the applicant has been denied a loan for the same purpose; or
    2. the loan from the financial institution is contingent on the applicant also receiving a loan from the fund.
  2. The duration for repayment of the loan may not exceed 20 years.
  3. [Repealed, § 38 ch 83 SLA 2010.]
  4. [Repealed, § 38 ch 83 SLA 2010.]
  5. The rate of interest for a loan under AS 45.88.010 45.88.090 is the prime rate, as defined by AS 44.88.599 , plus one percentage point, but may not be less than five percent a year.
  6. A loan under AS 45.88.010 45.88.090 must be secured by a mortgage or other security instrument in the real property to be improved and a lien on the improvements financed with the loan.

History. (§ 1 ch 29 SLA 1978; am § 7 ch 56 SLA 1979; am § 21 ch 72 SLA 1979; am §§ 30 — 33 ch 83 SLA 1980; am §§ 57, 58 ch 113 SLA 1982; am § 19 ch 102 SLA 1983; am §§ 80, 81 ch 14 SLA 1987; am § 76 ch 36 SLA 1990; am §§ 24 — 26, 38 ch 83 SLA 2010)

Revisor’s notes. —

In 2006, “AS 45.88.010 45.88.090 ” was substituted for “this chapter”.

Administrative Code. —

For alternative energy loans, see 3 AAC 78.

Effect of amendments. —

The 2010 amendment, effective September 14, 2010, repealed and reenacted (a); repealed (c); repealed (d); in (e), substituted “under AS 45.88.010 45.88.090 is the prime rate, as defined by AS 45.88.599, plus one percentage point, but may not be less than five percent a year” for “for an alternative energy system is five percent for the first $15,000 of the loan and 15 percent for the amount of the loan that exceeds $15,000”; added (f).

Sec. 45.88.040. Sale or transfer of mortgages and notes. [Repealed, § 38 ch 83 SLA 2010.]

Sec. 45.88.050. Disposal of property acquired by default or foreclosure.

The Department of Commerce, Community, and Economic Development shall dispose of property acquired through default or foreclosure of a loan made under AS 45.88.010 45.88.090 . Disposal shall be made in a manner that serves the best interests of the state, and may include the amortization of payments over a period of years.

History. (§ 24 ch 79 SLA 1985)

Revisor’s notes. —

In 1999, in (a) of this section, “Department of Commerce and Economic Development” was changed to “Department of Community and Economic Development” in accordance with § 88, ch. 58, SLA 1999.

In 2004, in this section, “Department of Community and Economic Development” was changed to “Department of Commerce, Community, and Economic Development”, in accordance with § 3, ch. 47, SLA 2004.

In 2006, “AS 45.88.010 45.88.090 ” was substituted for “this chapter”.

Administrative Code. —

For repossessed property, see 3 AAC 77.

Sec. 45.88.090. Definition.

  1. In AS 45.88.010 45.88.090 ,
    1. “alternative energy system”
      1. means a source of thermal, mechanical or electrical energy that is not dependent on oil or gas or a nuclear fuel for the supply of energy for space heating and cooling, refrigeration and cold storage, electrical power, mechanical power, or the heating of water;
      2. includes
        1. an alternative energy property as defined by 26 U.S.C. 48(a)(3)(A) (Sec. 301, P.L. 95-618, Internal Revenue Code);
        2. a method of architectural design and construction that provides for the collection, storage, and use of direct radiation from the sun;
        3. a woodstove that complies with the provisions of 40 C.F.R. 60.530;
        4. a steam, hot water, or ducted hot air central heating system that uses wood or coal for fuel; and
        5. a high efficiency wood pellet or grain stove;
      3. does not include
        1. a stove that uses only coal or oil for fuel; or
        2. a fireplace or fireplace insert;
    2. “commercial building”
      1. means a building that is intended to be used for commercial purposes;
      2. does not include
        1. a residential structure or mobile home that contains one to four family housing units; or
        2. individual units of condominiums or cooperatives;
    3. “energy conservation improvement” means
      1. structural insulation;
      2. thermal windows and doors;
      3. a furnace replacement burner designed to achieve a reduction in the amount of fuel consumed as a result of increased combustion efficiency;
      4. a device for modifying flue openings designed to increase the efficiency of operation of the heating system;
      5. an electrical or mechanical furnace ignition system that replaces a gas pilot light;
      6. an automatic energy-saving setback thermostat;
      7. a meter that displays the cost of energy usage;
      8. caulking and weather-stripping of doors and windows;
      9. insulating shades and shutters;
      10. air and water recuperators.
  2. [Renumbered as AS 45.88.010(d) .]

History. (§ 34 ch 83 SLA 1980; am §§ 59, 60 ch 113 SLA 1982; am § 10 ch 79 SLA 1983; am § 20 ch 102 SLA 1983; am § 27 ch 83 SLA 2010)

Revisor’s notes. —

Enacted as AS 45.88.050 and renumbered as AS 45.88.500 in 1980. Renumbered again in 2006, at which time “AS 45.88.010 45.88.090 ” was substituted for “this chapter”.

Paragraphs (a)(2)(D) and (a)(2)(E) were renumbered in 1983 as (a)(2)(C) and (a)(2)(D) respectively when former (a)(2)(C) was repealed.

Effect of amendments. —

The 2010 amendment, effective September 14, 2010, rewrote (a).

Article 2. Residential Energy Conservation Fund.

Administrative Code. —

For residential energy conservation loans, see 3 AAC 79.

Sec. 45.88.100. Fund established.

  1. There is established in the Department of Commerce, Community, and Economic Development the residential energy conservation fund to carry out the purposes of AS 45.88.100 45.88.190 . Loans and grants made under AS 45.88.100 45.88.190 may be used to purchase, construct, and install an energy conservation improvement in residential buildings.
  2. Money in the fund may be used by the legislature to make appropriations for costs of administering AS 45.88.100 45.88.190 .
  3. On June 30 of each fiscal year the unexpended and unobligated cash balance of the fund that is attributable to loans owned by the fund lapses into the general fund.

History. (§ 35 ch 83 SLA 1980; am § 6 ch 79 SLA 1983; am §§ 77, 78 ch 36 SLA 1990)

Revisor’s notes. —

Formerly AS 45.89.010 . Renumbered in 2006, at which time “AS 45.88.100 45.88.190 ” was substituted for “this chapter”.

In 1999, in (a) of this section, “Department of Commerce and Economic Development” was changed to “Department of Community and Economic Development” in accordance with § 88, ch. 58, SLA 1999.

In 2004, in (a) of this section, “Department of Community and Economic Development” was changed to “Department of Commerce, Community, and Economic Development”, in accordance with § 3, ch. 47, SLA 2004.

Sec. 45.88.110. Special account established.

  1. There is established as a special account within the residential energy conservation fund the foreclosure expense account.  This account is established as a reserve from fund equity.
  2. The commissioner may expend money credited to the foreclosure expense account when necessary to protect the state’s security interest in collateral on loans made under AS 45.88.120 or to defray expenses incurred during foreclosure proceedings after a default by an obligor.

History. (§ 25 ch 79 SLA 1985)

Revisor’s notes. —

Formerly AS 45.89.015. Renumbered in 2006, at which time “AS 45.88.120 ” was substituted for “AS 45.89.030 ”.

Sec. 45.88.120. Loans.

  1. The department may make loans for the purchase, construction, and installation of an energy conservation improvement in a residential building.
  2. A loan for the purchase, construction, and installation of an energy conservation improvement under  AS 45.88.100 45.88.190 may not exceed the lesser of
    1. an amount, as determined by an energy audit, that is equal to the estimated total energy cost saving attributable to the energy conservation improvement at a date that is 10 years after purchase, construction, or installation of the energy conservation improvement;
    2. $5,000.
  3. A loan for the purchase, construction, and installation of an energy conservation improvement under  AS 45.88.100 45.88.190 may be made for only an energy conservation improvement that has been recommended, in any energy audit, as a measure that is likely to result in energy conservation or energy cost savings.
  4. A loan made under  AS 45.88.100 45.88.190 may be used to finance
    1. all of the cost of purchasing, constructing, and installing an energy conservation improvement; and
    2. the costs of labor for the installation of an energy conservation improvement.
  5. Interest shall be charged on a loan made under  AS 45.88.100 45.88.190 . If a loan is made before January 1, 1984, interest shall be five percent.  If the loan is made after December 31, 1983, interest shall equal the percentage of the average weekly yield of municipal bonds for the 12 months preceding the loan, as determined by the commissioner from the municipal bond yield rates reported in the 30-year revenue index of the Weekly Bond Buyer.
  6. The duration of repayment of a loan made under  AS 45.88.100 45.88.190 may not exceed 10 years.
  7. The department may require security for a loan under this section.  When a loan is made under this section, the department may require the loan applicant to present copies of invoices or billings for expenses which the proceeds of the loan will be used to pay.
  8. All principal and interest payments, and money chargeable to principal or interest that is collected through liquidation by foreclosure or other process on a loan made under  AS 45.88.100 45.88.190 , shall be paid into the residential energy conservation fund.
  9. A person who receives a loan under this section and knowingly uses the loan proceeds for purposes other than those set out in (d) of this section is guilty of the crime of misapplication of property under  AS 11.46.620 .
  10. If, in the opinion of the department, it is not necessary to conduct an energy audit to determine that a loan application meets the requirements of this section, the department may waive the audit requirement for the applicant.
  11. The department may not make a loan under  AS 45.88.100 45.88.190 to a person who has a past due child support obligation established by court order or by the child support services agency under  AS 25.27.160 25.27.220 at the time of application.

History. (§ 35 ch 83 SLA 1980; am § 61 ch 113 SLA 1982; am § 10 ch 116 SLA 1986; am § 79 ch 36 SLA 1990)

Revisor’s notes. —

Formerly AS 45.89.030 . Renumbered in 2006, at which time “AS 45.88.100 45.88.190 ” was substituted for “this chapter”.

In 2004, “child support enforcement division” was changed to “child support services agency” in (k) of this section in accordance with § 12(a), ch. 107, SLA 2004, and to correct a manifest error.

Sec. 45.88.130. Sale or transfer of mortgages and notes.

The commissioner may sell or transfer at par value or at a premium or discount to any bank or other private purchaser for cash or other consideration the mortgages and notes held by the department as security for loans made under AS 45.88.100 45.88.190 .

History. (§ 35 ch 83 SLA 1980)

Revisor’s notes. —

Formerly AS 45.89.040. Renumbered in 2006, at which time “AS 45.88.100 45.88.190 ” was substituted for “this chapter”.

Sec. 45.88.140. Disposal of property acquired by default or foreclosure.

The department shall dispose of property acquired through default or foreclosure of a loan made under AS 45.88.100 45.88.190 . Disposal shall be made in a manner that serves the best interests of the state, and may include the amortization of payments over a period of years.

History. (§ 26 ch 79 SLA 1985)

Revisor’s notes. —

Formerly AS 45.89.050. Renumbered in 2006, at which time “AS 45.88.100 45.88.190 ” was substituted for “this chapter”.

Sec. 45.88.150. Regulations.

  1. The department shall adopt regulations necessary to carry out the provisions of AS 45.88.100 45.88.190 , including regulations to establish reasonable fees for services provided and charges for collecting the fees.
  2. The department may collect the fees and collection charges established under (a) of this section.

History. (§ 26 ch 79 SLA 1985; am §§ 80, 81 ch 36 SLA 1990)

Revisor’s notes. —

Formerly AS 45.89.070. Renumbered in 2006, at which time “AS 45.88.100 45.88.190 ” was substituted for “this chapter”.

Administrative Code. —

For repossessed property, see 3 AAC 77.

Sec. 45.88.190. Definitions.

In AS 45.88.010 45.88.190 ,

  1. “commissioner” means the commissioner of commerce, community, and economic development;
  2. “department” means the Department of Commerce, Community, and Economic Development;
  3. “energy audit” means
    1. [Repealed, § 10 ch 79 SLA 1983.]
    2. an energy audit performed under § 215(b)(1)(A) of the federal residential energy conservation program of the National Energy Conservation Policy Act (42 U.S.C. 8216(b)(1)(A)); or
    3. an energy audit completed before July 1, 1980, that has been approved by the commissioner as an audit that fairly demonstrates the energy consumption characteristics of a residence and that indicates likely energy conservation and cost savings measures;
  4. “energy conservation improvement” means
    1. structural insulation;
    2. thermal windows and doors;
    3. a furnace replacement burner designed to achieve a reduction in the amount of fuel consumed as a result of increased combustion efficiency;
    4. a device for modifying flue openings designed to increase the efficiency of operation of the heating system;
    5. an electrical or mechanical furnace ignition system which replaces a gas pilot light;
    6. an automatic energy-saving setback thermostat;
    7. a meter which displays the cost of energy usage;
    8. caulking and weatherstripping of doors and windows;
    9. insulating shades and shutters;
    10. air and water recuperators;
    11. any other energy-saving device approved by the commissioner.

History. (§ 35 ch 83 SLA 1980; am § 10 ch 79 SLA 1983; am § 67 ch 37 SLA 1986)

Revisor’s notes. —

Enacted as AS 45.89.100 and renumbered as AS 45.89.500 in 1980. Renumbered again in 2006, at which time “ AS 45.88.100 45.88.190 ” was substituted for “this chapter”.

In 1999, in this section, “commissioner of commerce and economic development” was changed to “commissioner of community and economic development” and “Department of Commerce and Economic Development” was changed to “Department of Community and Economic Development” in accordance with § 88, ch. 58, SLA 1999.

In 2004, “commissioner of community and economic development” was changed to “commissioner of commerce, community, and economic development” and “Department of Community and Economic Development” was changed to “Department of Commerce, Community, and Economic Development”, in accordance with § 3, ch. 47, SLA 2004.

Editor’s notes. —

Subparagraph (3)(B) of this section refers to 50 U.S.C. App 453 which was renumbered in 2015 as 50 U.S.C. 3802 by the U.S. House of Representatives, Office of Law Revision Counsel.

Subparagraph (3)(B) refers to 42 U.S.C. 8216(b)(1)(A). The program provided for under 42 U.S.C. 8216(b)(1)(A) was terminated on June 30, 1989 under 42 U.S.C. 8229. 42 U.S.C. 8216(b)was then omitted from the United States Code.

Sec. 45.88.500. [Subsection (a) renumbered as AS 45.88.090; subsection (b) renumbered as AS 45.88.010(d).]

Chapter 89. Residential Energy Conservation Fund.

Secs. 45.89.010 — 45.89.015. [Renumbered as AS 45.88.100 — 45.88.110.]

Sec. 45.89.020. Refunds and grants. [Repealed, § 10 ch 79 SLA 1983.]

Secs. 45.89.030 — 45.89.500. [Renumbered as AS 45.88.120 — 45.88.190.]

Chapter 90. Tourism Revolving Fund.

[Renumbered as AS 45.81.100 45.81.190 .]

Chapter 91. Fishery Product Revolving Loan Fund.

[Repealed, § 3 ch 33 SLA 1982.]

Chapter 92. Fishery Product Revolving Loan Guarantee Fund.

[Repealed, § 12 ch 42 SLA 1997.]

Chapter 94. Forest Products Business Loan Guarantee Program.

[Repealed, § 12 ch 42 SLA 1997.]

Chapter 95. Small Business Loans.

Secs. 45.95.010 — 45.95.020. [Renumbered as AS 45.81.200 — 45.81.210.]

Sec. 45.95.030. Sale or transfer of preferred commercial paper. [Repealed, § 33 ch 141 SLA 1988.]

Sec. 45.95.040. [Renumbered as AS 45.81.220.]

Sec. 45.95.050. Power of commissioner to assign and sell mortgages. [Repealed, § 69 ch 21 SLA 1985.]

Secs. 45.95.055 — 45.95.080. [Renumbered as AS 45.81.230 — 45.81.290.]

Chapter 98. Historical District Loan Act.

Cross references. —

For legislative intent in enacting this chapter, see § 1, ch. 139, SLA 1977 in the Temporary and Special Acts.

Administrative Code. —

For historical district loans, see 3 AAC 83.

Sec. 45.98.010. Creation of historical district revolving loan fund.

  1. There is created in the Department of Commerce, Community, and Economic Development a historical district revolving loan fund.  All principal and interest payments, and money chargeable to principal or interest that is collected through liquidation by foreclosure or other process on loans made under this chapter, shall be paid into the historical district revolving loan fund.
  2. Money in the fund may be used by the legislature to make appropriations for costs of administering this chapter.
  3. On June 30 of each fiscal year the unexpended and unobligated cash balance of the fund that is attributable to loans owned by the fund lapses into the general fund.

History. (§ 3 ch 139 SLA 1977; am §§ 88, 89 ch 36 SLA 1990)

Revisor’s notes. —

In 1999, in (a) of this section, “Department of Commerce and Economic Development” was changed to “Department of Community and Economic Development” in accordance with § 88, ch. 58, SLA 1999.

In 2004, in (a) of this section, “Department of Community and Economic Development” was changed to “Department of Commerce, Community, and Economic Development”, in accordance with § 3, ch. 47, SLA 2004.

Sec. 45.98.015. Special account established.

  1. There is established as a special account within the historical district revolving loan fund the foreclosure expense account.  This account is established as a reserve from fund equity.
  2. The commissioner of commerce, community, and economic development may expend money credited to the foreclosure expense account when necessary to protect the state’s security interest in collateral on loans made under this chapter, or to defray expenses incurred during foreclosure proceedings after a default by an obligor.

History. (§ 31 ch 79 SLA 1985)

Revisor’s notes. —

In 1999, in (b) of this section, “commissioner of commerce and economic development” was changed to “commissioner of community and economic development” in accordance with § 88, ch. 58, SLA 1999.

In 2004, in (b) of this section, “commissioner of community and economic development” was changed to “commissioner of commerce, community, and economic development”, in accordance with § 3, ch. 47, SLA 2004.

Sec. 45.98.020. Historical district loans.

Upon endorsement and plan approval by a local historical district commission established under AS 29.55.010 or former AS 29.48.108 and the recommendation of a majority of the members of the Alaska Historical Commission, the Department of Commerce, Community, and Economic Development may make loans to a person, firm, business, or municipality subject to applicable laws for the restoration, improvement, rehabilitation, or maintenance of a structure that is

  1. within the boundaries of a historical district established under AS 29.55.020 or former AS 29.48.110 and identified as important in state or national history as provided for in AS 29.55.020 (b) or former AS 29.48.110(b); or
  2. a building or structure within a historical district, that is suitable for superficial modification so that it can conform to the period or motif of the surrounding buildings or structures that are the reason for the area’s designation as a historical district.

History. (§ 3 ch 139 SLA 1977; am § 80 ch 74 SLA 1985; am § 32 ch 79 SLA 1985; am E.O. No. 83 § 17 (1993))

Revisor’s notes. —

In 1999, in this section, “Department of Commerce and Economic Development” was changed to “Department of Community and Economic Development” in accordance with § 88, ch. 58, SLA 1999.

In 2004, in this section, “Department of Community and Economic Development” was changed to “Department of Commerce, Community, and Economic Development”, in accordance with § 3, ch. 47, SLA 2004.

Cross references. —

For Alaska Historical Commission, see AS 41.35.300 41.35.380 .

Administrative Code. —

For historical district loans, see 3 AAC 83.

Opinions of attorney general. —

The zoning power vested in the Department of Natural Resources under this section is broad enough to encompass the creation of historical districts as a control over the land use, but the exercise of that authority does not make the property eligible for historic preservation loans under AS 45.98, which is aimed solely at historic districts established by municipalities. January 3, 1980, Op. Att’y Gen.

Sec. 45.98.030. Powers and duties of the department.

For purposes of administering this chapter, the Department of Commerce, Community, and Economic Development may

  1. prescribe the form and procedure for submitting loan applications under this chapter;
  2. designate agents and delegate powers to them as is necessary;
  3. in consultation with the Alaska Historical Commission, adopt regulations necessary to carry out its functions, including regulations for the process of plan approval by the commission and regulations to establish reasonable fees for services provided and charges for collecting the fees;
  4. establish amortization plans for the repayment of loans not to exceed 30 years;
  5. collect the fees and collection charges established under this section.

History. (§ 3 ch 139 SLA 1977; am § 90 ch 36 SLA 1990; am E.O. No. 83 § 18 (1993))

Revisor’s notes. —

In 1999, in this section, “Department of Commerce and Economic Development” was changed to “Department of Community and Economic Development” in accordance with § 88, ch. 58, SLA 1999.

In 2004, in this section, “Department of Community and Economic Development” was changed to “Department of Commerce, Community, and Economic Development”, in accordance with § 3, ch. 47, SLA 2004.

Administrative Code. —

For repossessed property, see 3 AAC 77.

For historical district loans, see 3 AAC 83.

Sec. 45.98.040. Limitations on loans.

Loans made under this chapter are subject to the following limitations:

  1. state participation in all loans in the aggregate, for any one historical district qualifying under this chapter may not exceed $1,500,000;
  2. state participation in a loan for the restoration, improvement, rehabilitation, or maintenance of any one building or structure qualifying under this chapter may not exceed $250,000;
  3. the loans shall be secured by acceptable collateral and may not exceed 85 percent of the appraised value of the collateral offered as security;
  4. the rate of interest may not exceed seven and one-half percent a year on the unpaid balance of the state’s share of the loan;
  5. a participating financial institution shall administer and service the loan for a reasonable fee not exceeding one-quarter of one percent;
  6. the state has a lien on the property accepted as collateral to the extent of its portion of the loan; when the lien or notice of the lien is properly recorded it is superior to all other liens except those for taxes and special assessments; a lien of the participating financial institution, to the extent of its portion of the loan after it is properly recorded, is superior to all other liens except liens for taxes, special assessments, and the lien of the state.

History. (§ 3 ch 139 SLA 1977; am § 27 ch 27 SLA 1979; am § 62 ch 113 SLA 1982)

Sec. 45.98.050. Sale or transfer of mortgages and notes.

  1. The commissioner of commerce, community, and economic development or a designee of the commissioner may sell or transfer at par value or at a premium or discount to any bank or other private purchaser for cash or other consideration the mortgages and notes held by the Department of Commerce, Community, and Economic Development as security for loans made under this chapter.
  2. [Repealed, § 33 ch 141 SLA 1988.]

History. (§ 3 ch 139 SLA 1977; am § 33 ch 141 SLA 1988)

Revisor’s notes. —

In 1999, in (a) of this section, “commissioner of commerce and economic development” was changed to “commissioner of community and economic development” and “Department of Commerce and Economic Development” was changed to “Department of Community and Economic Development” in accordance with § 88, ch. 58, SLA 1999.

In 2004, in (a) of this section, “commissioner of community and economic development” was changed to “commissioner of commerce, community, and economic development” and “Department of Community and Economic Development” was changed to “Department of Commerce, Community, and Economic Development”, in accordance with § 3, ch. 47, SLA 2004.

Sec. 45.98.055. Disposal of property acquired by default or foreclosure.

The Department of Commerce, Community, and Economic Development shall dispose of property acquired through default or foreclosure of a loan made under this chapter. Disposal shall be made in a manner that serves the best interests of the state, and may include the amortization of payments over a period of years.

History. (§ 33 ch 79 SLA 1985)

Revisor’s notes. —

In 1999, in this section, “Department of Commerce and Economic Development” was changed to “Department of Community and Economic Development” in accordance with § 88, ch. 58, SLA 1999.

In 2004, in this section, “Department of Community and Economic Development” was changed to “Department of Commerce, Community, and Economic Development”, in accordance with § 3, ch. 47, SLA 2004.

Administrative Code. —

For repossessed property, see 3 AAC 77.

Sec. 45.98.060. Penalty provision.

After a project for which a loan is granted is commenced, if the Department of Commerce, Community, and Economic Development or a local historical district commission, in consultation with the Alaska Historical Commission, determines that the project is inconsistent with the guidelines or stipulations for construction, or otherwise fails to conform to the requirements of the loan, the interest rate on the state’s share of the loan shall be increased to the highest rate of interest allowed at that time as provided in AS 45.45.010 . In addition, a penalty in the amount of two percent of the balance of the loan shall be assessed by the Department of Commerce, Community, and Economic Development.

History. (§ 3 ch 139 SLA 1977; am E.O. No. 83 § 19 (1993))

Revisor’s notes. —

In 1999, in this section, “Department of Commerce and Economic Development” was changed to “Department of Community and Economic Development” in accordance with § 88, ch. 58, SLA 1999.

In 2004, in this section, “Department of Community and Economic Development” was changed to “Department of Commerce, Community, and Economic Development”, in accordance with § 3, ch. 47, SLA 2004.

Sec. 45.98.070. Short title.

This chapter may be cited as the Historical District Loan Act.

History. (§ 3 ch 139 SLA 1977)