Pennsylvania Commercial Code Title 13

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TABLE OF CONTENTS

TITLE 13COMMERCIAL CODE

DIVISION 1. GENERAL PROVISIONS

Chapter 11. General Provisions

1101. Short titles. 1102. Scope of division. 1103. Construction of title to promote its purposes and

policies; applicability of supplemental principlesof law.

1104. Construction against implied repeal. 1105. (Reserved). 1106. Use of singular and plural; gender. 1107. Section captions. 1108. Relation to Electronic Signatures in Global and

National Commerce Act.

Chapter 12. General Definitions and Principles ofInterpretation

1201. General definitions. 1202. Notice; knowledge. 1203. Lease distinguished from security interest. 1204. Value. 1205. Reasonable time; seasonableness. 1206. Presumptions.

Chapter 13. Territorial Applicability and General Rules

1301. Territorial applicability; parties' power to choose

applicable law. 1302. Variation by agreement. 1303. Course of performance, course of dealing and usage of

trade. 1304. Obligation of good faith. 1305. Remedies to be liberally administered. 1306. Waiver or renunciation of claim or right after breach. 1307. Prima facie evidence by third-party documents. 1308. Performance or acceptance under reservation of rights. 1309. Option to accelerate at will. 1310. Subordinated obligations.

DIVISION 2. SALES

Chapter 21. Short Title, General Construction and SubjectMatte r

2101. Short title of division. 2102. Scope; certain security and other transactions excluded

from division. 2103. Definitions and index of definitions. 2104. Definitions: "merchant"; "between merchants";

"financing agency." 2105. Definitions: transferability; "goods"; "future" goods;

"lot"; "commercial unit."


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2106. Definitions: "contract"; "agreement"; "contract forsale"; "sale"; "present sale"; "conforming" tocontract; "termination"; "cancellation."

2107. Goods to be severed from realty: recording.

Chapter 22. Form, Formation and Readjustment of Contract

2201. Formal requirements; statute of frauds. 2202. Final written expression: parol or extrinsic evidence. 2203. Seals inoperative.

2204. Formation in general. 2205. Firm offers. 2206. Offer and acceptance in formation of contract. 2207. Additional terms in acceptance or confirmation. 2208. Course of performance or practical construction

(Deleted by amendment). 2209. Modification, rescission and waiver. 2210. Delegation of performance; assignment of rights.

Chapter 23. General Obligation and Construction of Contract

2301. General obligations of parties. 2302. Unconscionable contract or clause.

2303. Allocation or division of risks. 2304. Price payable in money, goods, realty or otherwise. 2305. Open price term. 2306. Output, requirements and exclusive dealings. 2307. Delivery in single lot or several lots. 2308. Absence of specified place for delivery. 2309. Absence of specific time provisions; notice of

termination. 2310. Open time for payment or running of credit; authority

to ship under reservation. 2311. Options and cooperation respecting performance. 2312. Warranty of title and against infringement; obligation

of buyer against infringement. 2313. Express warranties by affirmation, promise, description

or sample. 2314. Implied warranty: merchantability; usage of trade. 2315. Implied warranty: fitness for particular purpose. 2316. Exclusion or modification of warranties. 2317. Cumulation and conflict of warranties express or

implied. 2318. Third party beneficiaries of warranties express or

implied. 2319. F.O.B. and F.A.S. terms. 2320. C.I.F. and C. & F. terms. 2321. C.I.F. or C. & F.: "net landed weights"; "payment on

arrival"; warranty of condition on arrival. 2322. Delivery "ex-ship." 2323. Form of bill of lading required in overseas shipment;

"overseas." 2324. "No arrival, no sale" term. 2325. "Letter of credit" term; "confirmed credit." 2326. Sale on approval and sale or return; rights of

creditors. 2327. Special incidents of sale on approval and sale or

return. 2328. Sale by auction.

Chapter 24. Title, Creditors and Good Faith Purchasers


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2401. Passing of title; reservation for security; limitedapplication of section.

2402. Rights of creditors of seller against sold goods. 2403. Power to transfer; good faith purchase of goods;

"entrusting."

Chapter 25. Performance

2501. Insurable interest in goods; manner of identificationof goods.

2502. Right of buyer to goods on repudiation, failure todeliver or insolvency of seller. 2503. Manner of tender of delivery by seller. 2504. Shipment by seller. 2505. Shipment by seller under reservation. 2506. Rights of financing agency. 2507. Effect of tender by seller; delivery on condition. 2508. Cure by seller of improper tender or delivery;

replacement. 2509. Risk of loss in absence of breach. 2510. Effect of breach on risk of loss. 2511. Tender of payment by buyer; payment by check. 2512. Payment by buyer before inspection.

2513. Right of buyer to inspection of goods. 2514. When documents deliverable on acceptance; when onpayment.

2515. Preserving evidence of goods in dispute.

Chapter 26. Breach, Repudiation and Excuse

2601. Rights of buyer on improper delivery. 2602. Manner and effect of rightful rejection. 2603. Duties of merchant buyer as to rightfully rejected

goods. 2604. Options of buyer as to salvage of rightfully rejected

goods. 2605. Waiver of objections of buyer by failure to

particularize. 2606. What constitutes acceptance of goods. 2607. Effect of acceptance; notice of breach; burden of

establishing breach after acceptance; notice of claimor litigation to person answerable over.

2608. Revocation of acceptance in whole or in part. 2609. Right to adequate assurance of performance. 2610. Anticipatory repudiation. 2611. Retraction of anticipatory repudiation. 2612. "Installment contract"; breach. 2613. Casualty to identified goods. 2614. Substituted performance. 2615. Excuse by failure of presupposed conditions. 2616. Procedure on notice claiming excuse.

Chapter 27. Remedies

2701. Remedies for breach of collateral contracts notimpaired.

2702. Remedies of seller on discovery of insolvency of buyer. 2703. Remedies of seller in general. 2704. Right of seller to identify goods to contract

notwithstanding breach or to salvage unfinishedgoods.

2705. Stoppage by seller of delivery in transit or otherwise.


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2706. Resale by seller including contract for resale. 2707. "Person in the position of a seller." 2708. Damages of seller for nonacceptance or repudiation. 2709. Action for the price. 2710. Incidental damages of seller. 2711. Remedies of buyer in general; security interest of

buyer in rejected goods. 2712. "Cover"; procurement by buyer of substitute goods. 2713. Damages of buyer for nondelivery or repudiation. 2714. Damages of buyer for breach in regard to accepted

goods. 2715. Incidental and consequential damages of buyer. 2716. Right of buyer to specific performance or replevin. 2717. Deduction of damages from price. 2718. Liquidation or limitation of damages; deposits. 2719. Contractual modification or limitation of remedy. 2720. Effect of "cancellation" or "rescission" on claims for

antecedent breach. 2721. Remedies for fraud. 2722. Who can sue third parties for injury to goods. 2723. Proof of market price: time and place. 2724. Admissibility of market quotations. 2725. Statute of limitations in contracts for sale.

DIVISION 2A. LEASES

Chapter 2A1. General Provisions

2A101. Short title of division. 2A102. Scope. 2A103. Definitions and index of definitions. 2A104. Leases subject to other law. 2A105. Territorial application of division to goods covered

by certificate of title. 2A106. Limitation on power of parties to consumer lease to

choose applicable law and judicial forum. 2A107. Waiver or renunciation of claim or right after

default. 2A108. Unconscionability. 2A109. Option to accelerate at will.

Chapter 2A2. Formation and Construction of Lease Contract

2A201. Statute of frauds. 2A202. Final written expression: parol or extrinsic evidence. 2A203. Seals inoperative. 2A204. Formation in general. 2A205. Firm offers. 2A206. Offer and acceptance in formation of lease contract. 2A207. Course of performance or practical construction

(Deleted by amendment). 2A208. Modification, rescission and waiver. 2A209. Lessee under finance lease as beneficiary of supply

contract. 2A210. Express warranties. 2A211. Warranties against interference and against

infringement; lessee's obligation againstinfringement.

2A212. Implied warranty of merchantability. 2A213. Implied warranty of fitness for particular purpose. 2A214. Exclusion or modification of warranties.


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2A215. Cumulation and conflict of warranties express orimplied.

2A216. Third party beneficiaries of express and impliedwarranties.

2A217. Identification. 2A218. Insurance and proceeds. 2A219. Risk of loss. 2A220. Effect of default on risk of loss. 2A221. Casualty to identified goods.

Chapter 2A3. Effect of Lease Contract

2A301. Enforceability of lease contract. 2A302. Title to and possession of goods. 2A303. Alienability of party's interest under lease contract

or of lessor's residual interest in goods; delegationof performance; transfer of rights.

2A304. Subsequent lease of goods by lessor. 2A305. Sale or sublease of goods by lessee. 2A306. Priority of certain liens arising by operation oflaw. 2A307. Priority of liens arising by attachment or levy on,

security interests in, and other claims to goods.

2A308. Special rights of creditors. 2A309. Lessor's and lessee's rights when goods becomefixtures.

2A310. Lessor's and lessee's rights when goods becomeaccessions.

2A311. Priority subject to subordination.

Chapter 2A4. Performance of Lease Contract: Repudiated,Substituted and Excused

2A401. Insecurity: adequate assurance of performance. 2A402. Anticipatory repudiation. 2A403. Retraction of anticipatory repudiation. 2A404. Substituted performance. 2A405. Excused performance. 2A406. Procedure on excused performance. 2A407. Irrevocable promises: finance leases.

Chapter 2A5. Default

Subchapter A. In General

2A501. Default: procedure. 2A502. Notice after default. 2A503. Modification or impairment of rights and remedies. 2A504. Liquidation of damages. 2A505. Cancellation and termination and effect of

cancellation, termination, rescission or fraud onrights and remedies.

2A506. Statute of limitations. 2A507. Proof of market rent: time and place.

Subchapter B. Default by Lessor

2A508. Lessee's remedies. 2A509. Lessee's rights on improper delivery; rightful

rejection. 2A510. Installment lease contracts: rejection and default.


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2A511. Merchant lessee's duties as to rightfully rejectedgoods.

2A512. Lessee's duties as to rightfully rejected goods. 2A513. Cure by lessor of improper tender or delivery;

replacement. 2A514. Waiver of lessee's objections. 2A515. Acceptance of goods. 2A516. Effect of acceptance of goods; notice of default;

burden of establishing default after acceptance;notice of claim or litigation to person answerable

over. 2A517. Revocation of acceptance of goods. 2A518. Cover; substitute goods. 2A519. Lessee's damages for nondelivery, repudiation, default

and breach of warranty in regard to accepted goods. 2A520. Lessee's incidental and consequential damages. 2A521. Lessee's right to specific performance or replevin. 2A522. Lessee's right to goods on lessor's insolvency.

Subchapter C. Default by Lessee

2A523. Lessor's remedies. 2A524. Lessor's right to identify goods to lease contract.

2A525. Lessor's right to possession of goods. 2A526. Lessor's stoppage of delivery in transit or otherwise. 2A527. Lessor's rights to dispose of goods. 2A528. Lessor's damages for nonacceptance, failure to pay,

repudiation or other default. 2A529. Lessor's action for the rent. 2A530. Lessor's incidental damages. 2A531. Standing to sue third parties for injury to goods. 2A532. Lessor's rights to residual interest.

DIVISION 3. NEGOTIABLE INSTRUMENTS

Chapter 31. General Provisions and Definitions

3101. Short title of division. 3102. Subject matter. 3103. Definitions and index of definitions. 3104. Negotiable instrument. 3105. Issue of instrument. 3106. Unconditional promise or order. 3107. Instrument payable in foreign money. 3108. Payable on demand or at definite time. 3109. Payable to bearer or to order. 3110. Identification of person to whom instrument is payable. 3111. Place of payment. 3112. Interest. 3113. Date of instrument. 3114. Contradictory terms of instrument. 3115. Incomplete instrument. 3116. Joint and several liability; contribution. 3117. Other agreements affecting instrument. 3118. Statute of limitations. 3119. Notice of right to defend action.

Chapter 32. Negotiation, Transfer and Indorsement

3201. Negotiation. 3202. Negotiation subject to rescission. 3203. Transfer of instrument; rights acquired by transfer.


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3204. Indorsement. 3205. Special indorsement; blank endorsement; anomalous

endorsement. 3206. Restrictive indorsement. 3207. Reacquisition.

Chapter 33. Enforcement of Instruments

3301. Person entitled to enforce instrument. 3302. Holder in due course.

3303. Value and consideration. 3304. Overdue instrument. 3305. Defenses and claims in recoupment. 3306. Claims to an instrument. 3307. Notice of breach of fiduciary duty. 3308. Proof of signatures and status as holder in due course. 3309. Enforcement of lost, destroyed or stolen instrument. 3310. Effect of instrument on obligation for which taken. 3311. Accord and satisfaction by use of instrument. 3312. Lost, destroyed or stolen cashier's check, teller's

check or certified check.

Chapter 34. Liability of Parties

3401. Signature. 3402. Signature by representative. 3403. Unauthorized signature. 3404. Impostors; fictitious payees. 3405. Employer's responsibility for fraudulent indorsement

by employee. 3406. Negligence contributing to forged signature or

alteration of instrument. 3407. Alteration. 3408. Drawee not liable on unaccepted draft. 3409. Acceptance of draft; certified check. 3410. Acceptance varying draft. 3411. Refusal to pay cashier's checks, teller's checks and

certified checks. 3412. Obligation of issuer of note or cashier's check. 3413. Obligation of acceptor. 3414. Obligation of drawer. 3415. Obligation of indorser. 3416. Transfer warranties. 3417. Presentment warranties. 3418. Payment or acceptance by mistake. 3419. Instruments signed for accommodation. 3420. Conversion of instrument.

Chapter 35. Dishonor

3501. Presentment. 3502. Dishonor. 3503. Notice of dishonor. 3504. Excused presentment and notice of dishonor. 3505. Evidence of dishonor.

Chapter 36. Discharge and Payment

3601. Discharge and effect of discharge. 3602. Payment. 3603. Tender of payment. 3604. Discharge by cancellation or renunciation.


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3605. Discharge of indorsers and accommodation parties.

DIVISION 4. BANK DEPOSITS AND COLLECTIONS

Chapter 41. General Provisions and Definitions

4101. Short title of division. 4102. Applicability. 4103. Variation by agreement; measure of damages; action

constituting ordinary care.

4104. Definitions and index of definitions. 4105. "Bank"; "depositary bank"; "intermediary bank";"collecting bank"; "payor bank"; "presenting bank."

4106. Payable through or payable at bank; collecting bank. 4107. Separate office of a bank. 4108. Time of receipt of items. 4109. Delays. 4110. Electronic presentment. 4111. Statute of limitations.

Chapter 42. Collection of Items: Depositary and CollectingBanks

4201. Status of collecting bank as agent and provisionalstatus of credits; applicability of division; itemindorsed "pay any bank."

4202. Responsibility for collection or return; when actiontimely.

4203. Effect of instructions. 4204. Methods of sending and presenting; sending directly

to payor bank. 4205. Depositary bank holder of unindorsed item. 4206. Transfer between banks. 4207. Transfer warranties. 4208. Presentment warranties. 4209. Encoding and retention warranties. 4210. Security interest of collecting bank in items,

accompanying documents and proceeds. 4211. When bank gives value for purposes of holder in due

course. 4212. Presentment by notice of item not payable by, through

or at a bank; liability of drawer or indorser. 4213. Medium and time of settlement by bank. 4214. Right of charge-back or refund; liability of collecting

bank; return of item. 4215. Final payment of item by payor bank; when provisional

debits and credits become final; when certain creditsbecome available for withdrawal.

4216. Insolvency and preference.

Chapter 43. Collection of Items: Payor Banks

4301. Deferred posting; recovery of payment by return ofitems; time of dishonor; return of items by payorbank.

4302. Responsibility of payor bank for late return of item. 4303. When items subject to notice, stop-payment order, legal

process or set-off; order in which items may becharged or certified.

Chapter 44. Relationship Between Payor Bank and Its Customer


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4401. When bank may charge account of customer. 4402. Liability of bank to customer for wrongful dishonor;

time of determining insufficiency of account. 4403. Right of customer to stop payment; burden of proof of

loss. 4404. Bank not obligated to pay check more than six months

old. 4405. Death or incapacity of customer. 4406. Duty of customer to discover and report unauthorized

signature or alteration.

4407. Right of payor bank to subrogation on improper payment.

Chapter 45. Collection of Documentary Drafts

4501. Handling of documentary drafts; duty to send forpresentment and to notify customer of dishonor.

4502. Presentment of "on arrival" drafts. 4503. Responsibility of presenting bank for documents and

goods; report of reasons for dishonor; referee incase of need.

4504. Privilege of presenting bank to deal with goods;security interest for expenses.

DIVISION 4A. FUNDS TRANSFERSChapter 4A1. Subject Matter and Definitions

4A101. Short title of division. 4A102. Subject matter. 4A103. Payment order; definitions. 4A104. Funds transfer; definitions. 4A105. Other definitions. 4A106. Time payment order is received. 4A107. Federal Reserve regulations and operating circulars. 4A108. Exclusion of consumer transactions governed by Federal

law.

Chapter 4A2. Issue and Acceptance of Payment Order

4A201. Security procedure. 4A202. Authorized and verified payment orders. 4A203. Unenforceability of certain verified payment orders. 4A204. Refund of payment and duty of customer to report with

respect to unauthorized payment order. 4A205. Erroneous payment orders. 4A206. Transmission of payment order through funds-transfer

or other communication system. 4A207. Misdescription of beneficiary. 4A208. Misdescription of intermediary bank or beneficiary's

bank. 4A209. Acceptance of payment order. 4A210. Rejection of payment order. 4A211. Cancellation and amendment of payment order. 4A212. Liability and duty of receiving bank regarding

unaccepted payment order.

Chapter 4A3. Execution of Sender's Payment Order by ReceivingBank

4A301. Execution and execution date. 4A302. Obligations of receiving bank in execution of payment

order.


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LADING AND OTHER DOCUMENTS OF TITLE

Chapter 71. General

7101. Short title of division. 7102. Definitions and index of definitions. 7103. Relation of division to treaty or statute. 7104. Negotiable and nonnegotiable document of title. 7105. Reissuance in alternative medium. 7106. Control of electronic document of title.

Chapter 72. Warehouse Receipts: Special Provisions

7201. Person that may issue a warehouse receipt; storageunder bond.

7202. Form of warehouse receipt; effect of omission. 7203. Liability for nonreceipt or misdescription. 7204. Duty of care; contractual limitation of warehouse's

liability. 7205. Title under warehouse receipt defeated in certain

cases. 7206. Termination of storage at warehouse's option. 7207. Goods must be kept separate; fungible goods.

7208. Altered warehouse receipts. 7209. Lien of warehouse. 7210. Enforcement of warehouse's lien.

Chapter 73. Bills of Lading: Special Provisions

7301. Liability for nonreceipt or misdescription; "said tocontain"; "shipper's weight, load and count";improper handling.

7302. Through bills of lading and similar documents of title. 7303. Diversion; reconsignment; change of instructions. 7304. Tangible bills of lading in a set. 7305. Destination bills. 7306. Altered bills of lading. 7307. Lien of carrier. 7308. Enforcement of carrier's lien. 7309. Duty of care; contractual limitation of carrier's

liability.

Chapter 74. Warehouse Receipts and Bills of Lading: GeneralObligations

7401. Irregularities in issue of receipt or bill or conductof issuer.

7402. Duplicate document of title; overissue. 7403. Obligation of bailee to deliver; excuse. 7404. No liability for good faith delivery pursuant to

document of title.

Chapter 75. Warehouse Receipts and Bills of Lading: Negotiationand Transfer

7501. Form of negotiation and requirements of duenegotiation.

7502. Rights acquired by due negotiation. 7503. Document of title to goods defeated in certain cases. 7504. Rights acquired in absence of due negotiation; effect

of diversion; stoppage of delivery. 7505. Indorser not guarantor for other parties.


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7506. Delivery without indorsement; right to compelindorsement.

7507. Warranties on negotiation or delivery of document oftitle.

7508. Warranties of collecting bank as to documents of title. 7509. Adequate compliance with commercial contract.

Chapter 76. Warehouse Receipts and Bills of Lading:Misce lla neous Provi sio ns

7601. Lost, stolen or destroyed documents of title. 7602. Judicial process against goods covered by negotiabledocument of title.

7603. Conflicting claims; interpleader.

DIVISION 8. INVESTMENT SECURITIES

Chapter 81. Short Title and General Matters

8101. Short title of division. 8102. Definitions. 8103. Rules for determining whether certain obligations and

interests are securities or financial assets.

8104. Acquisition of security or financial asset or interesttherein. 8105. Notice of adverse claim. 8106. Control. 8107. Whether indorsement, instruction or entitlement order

is effective. 8108. Warranties in direct holding. 8109. Warranties in indirect holding. 8110. Applicability; choice of law. 8111. Clearing corporation rules. 8112. Creditor's legal process. 8113. Statute of frauds inapplicable. 8114. Evidentiary rules concerning certificated securities. 8115. Securities intermediary and others not liable to

adverse claimant. 8116. Securities intermediary as purchaser for value.

Chapter 82. Issue and Issuer

8201. Issuer. 8202. Issuer's responsibility and defenses; notice of defect

or defense. 8203. Staleness as notice of defect or defense. 8204. Effect of issuer's restriction on transfer. 8205. Effect of unauthorized signature on security

certificate. 8206. Completion or alteration of security certificate. 8207. Rights and duties of issuer with respect to registered

owners. 8208. Effect of signature of authenticating trustee,

registrar or transfer agent. 8209. Issuer's lien. 8210. Overissue.

Chapter 83. Transfer of Certificated and UncertificatedSecurities

8301. Delivery. 8302. Rights of purchaser.


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8303. Protected purchaser. 8304. Indorsement. 8305. Instruction. 8306. Effect of guaranteeing signature, indorsement or

instruction. 8307. Purchaser's right to requisites for registration of

transfer.

Chapter 84. Registration

8401. Duty of issuer to register transfer. 8402. Assurance that indorsement or instruction is effective. 8403. Demand that issuer not register transfer. 8404. Wrongful registration. 8405. Replacement of lost, destroyed or wrongfully taken

security certificate. 8406. Obligation to notify issuer of lost, destroyed or

wrongfully taken security certificate. 8407. Authenticating trustee, transfer agent and registrar.

Chapter 85. Security Entitlements

8501. Securities account; acquisition of security entitlement

from securities intermediary. 8502. Assertion of adverse claim against entitlement holder. 8503. Property interest of entitlement holder in financial

asset held by securities intermediary. 8504. Duty of securities intermediary to maintain financial

asset. 8505. Duty of securities intermediary with respect to

payments and distributions. 8506. Duty of securities intermediary to exercise rights as

directed by entitlement holder. 8507. Duty of securities intermediary to comply with

entitlement order. 8508. Duty of securities intermediary to change entitlement

holder's position to other form of security holding. 8509. Specification of duties of securities intermediary by

other statute or regulation; manner of performanceof duties of securities intermediary and exerciseof rights of entitlement holder.

8510. Rights of purchaser of security entitlement fromentitlement holder.

8511. Priority among security interests and entitlementholders.

DIVISION 9. SECURED TRANSACTIONS

Chapter 91. General Provisions

Subchapter A. Short Title, Definitions and General Concepts

9101. Short title of division. 9102. Definitions and index of definitions. 9103. Purchase-money security interest; application of

payments; burden of establishing. 9104. Control of deposit account. 9105. Control of electronic chattel paper. 9106. Control of investment property. 9107. Control of letter-of-credit right. 9108. Sufficiency of description.


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Subchapter B. Applicability of Division

9109. Scope. 9110. Security interests arising under Division 2 or 2A.

Chapter 92. Effectiveness of Security Agreement, Attachmentof Security Interest and Rights of Parties toSecurity Agreement

Subchapter A. Effectiveness and Attachment

9201. General effectiveness of security agreement. 9202. Title to collateral immaterial. 9203. Attachment and enforceability of security interest;

proceeds; supporting obligations; formal requisites. 9204. After-acquired property; future advances. 9205. Use or disposition of collateral permissible. 9206. Security interest arising in purchase or delivery of

financial asset.

Subchapter B. Rights and Duties

9207. Rights and duties of secured party having possession

or control of collateral. 9208. Additional duties of secured party having control ofcollateral.

9209. Duties of secured party if account debtor has beennotified of assignment.

9210. Request for accounting; request regarding list ofcollateral or statement of account.

Chapter 93. Perfection and Priority

Subchapter A. Law Governing Perfection and Priority

9301. Law governing perfection and priority of security

interests. 9302. Law governing perfection and priority of agriculturalliens.

9303. Law governing perfection and priority of securityinterests in goods covered by certificate of title.

9304. Law governing perfection and priority of securityinterests in deposit accounts.

9305. Law governing perfection and priority of securityinterests in investment property.

9306. Law governing perfection and priority of securityinterests in letter-of-credit rights.

9307. Location of debtor.

Subchapter B. Perfection

9308. When security interest or agricultural lien isperfected; continuity of perfection.

9309. Security interest perfected upon attachment. 9310. When filing required to perfect security interest or

agricultural lien; security interests andagricultural liens to which filing provisions do notapply.

9311. Perfection of security interests in property subjectto certain statutes, regulations and treaties.

9312. Perfection of security interests in chattel paper,deposit accounts, documents, goods covered by


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documents, instruments, investment property,letter-of-credit rights and money; perfection bypermissive filing; temporary perfection withoutfiling or transfer of possession.

9313. When possession by or delivery to secured partyperfects security interest without filing.

9314. Perfection by control. 9315. Secured party's rights on disposition of collateral

and in proceeds. 9316. Continued perfection of security interest following

change in governing law.

Subchapter C. Priority

9317. Interests which take priority over or take free ofsecurity interest or agricultural lien.

9318. No interest retained in right to payment which is sold;rights and title of seller of account or chattelpaper with respect to creditors and purchasers.

9319. Rights and title of consignee with respect to creditorsand purchasers.

9320. Buyer of goods. 9321. Licensee of general intangible and lessee of goods in

ordinary course of business. 9322. Priorities among conflicting security interests in andagricultural liens on same collateral.

9323. Future advances. 9324. Priority of purchase-money security interests. 9325. Priority of security interests in transferred

collateral. 9326. Priority of security interests created by new debtor. 9327. Priority of security interests in deposit account. 9328. Priority of security interests in investment property. 9329. Priority of security interests in letter-of-credit

right. 9330. Priority of purchaser of chattel paper or instrument. 9331. Priority of rights of purchasers of instruments,

documents and securities under other divisions;priority of interests in financial assets andsecurity entitlements under Division 8.

9332. Transfer of money; transfer of funds from depositaccount.

9333. Priority of certain liens arising by operation of law. 9334. Priority of security interests in fixtures and crops. 9335. Accessions. 9336. Commingled goods. 9337. Priority of security interests in goods covered by

certificate of title. 9338. Priority of security interest or agricultural lien

perfected by filed financing statement providing

certain incorrect information. 9339. Priority subject to subordination.

Subchapter D. Rights of Bank

9340. Effectiveness of right of recoupment or set-off againstdeposit account.

9341. Bank's rights and duties with respect to depositaccount.

9342. Bank's right to refuse to enter into or discloseexistence of control agreement.


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Chapter 94. Rights of Third Parties

9401. Alienability of debtor's rights. 9402. Secured party not obligated on contract of debtor or

in tort. 9403. Agreement not to assert defenses against assignee. 9404. Rights acquired by assignee; claims and defenses

against assignee. 9405. Modification of assigned contract. 9406. Discharge of account debtor; notification of

assignment; identification and proof of assignment;restrictions on assignment of accounts, chattelpaper, payment intangibles and promissory notesineffective.

9407. Restrictions on creation or enforcement of securityinterest in leasehold interest or in lessor'sresidual interest.

9408. Restrictions on assignment of promissory notes,health-care-insurance receivables and certain generalintangibles ineffective.

9409. Restrictions on assignment of letter-of-credit rightsineffective.

Chapter 95. Filing

Subchapter A. Filing Office; Contents and Effectiveness ofFinancing Statement

9501. Filing office. 9502. Contents of financing statement; record of mortgage

as financing statement; time of filing financingstatement.

9503. Name of debtor and secured party. 9504. Indication of collateral. 9505. Filing and compliance with other statutes and treaties

for consignments, leases, other bailments and other

transactions. 9506. Effect of errors or omissions. 9507. Effect of certain events on effectiveness of financing

statement. 9508. Effectiveness of financing statement if new debtor

becomes bound by security agreement. 9509. Persons entitled to file a record. 9510. Effectiveness of filed record. 9511. Secured party of record. 9512. Amendment of financing statement. 9513. Termination statement. 9514. Assignment of powers of secured party of record. 9515. Duration and effectiveness of financing statement;

effect of lapsed financing statement. 9516. What constitutes filing; effectiveness of filing. 9517. Effect of indexing errors. 9518. Claim concerning inaccurate or wrongfully filed record.

Subchapter B. Duties and Operation of Filing Office

9519. Numbering, maintaining and indexing records;communicating information provided in records.

9520. Acceptance and refusal to accept record. 9521. Uniform form of written financing statement and

amendment. 9522. Maintenance and destruction of records.


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9523. Information from filing office; sale or license ofrecords.

9524. Delay by filing office. 9525. Fees. 9526. Filing-office rules. 9527. Duty to report.

Chapter 96. Default

Subchapter A. Default and Enforcement of Security Interest

9601. Rights after default; judicial enforcement; consignoror buyer of accounts, chattel paper, paymentintangibles or promissory notes.

9602. Waiver and variance of rights and duties. 9603. Agreement on standards concerning rights and duties. 9604. Procedure if security agreement covers real property

or fixtures. 9605. Unknown debtor or secondary obligor. 9606. Time of default for agricultural lien. 9607. Collection and enforcement by secured party. 9608. Application of proceeds of collection or enforcement;

liability for deficiency and right to surplus.

9609. Secured party's right to take possession after default. 9610. Disposition of collateral after default. 9611. Notification before disposition of collateral. 9612. Timeliness of notification before disposition of

collateral. 9613. Contents and form of notification before disposition

of collateral: general. 9614. Contents and form of notification before disposition

of collateral: consumer-goods transaction. 9615. Application of proceeds of disposition; liability for

deficiency and right to surplus. 9616. Explanation of calculation of surplus or deficiency. 9617. Rights of transferee of collateral. 9618. Rights and duties of certain secondary obligors. 9619. Transfer of record or legal title. 9620. Acceptance of collateral in full or partial

satisfaction of obligation; compulsory dispositionof collateral.

9621. Notification of proposal to accept collateral. 9622. Effect of acceptance of collateral. 9623. Right to redeem collateral. 9624. Waiver.

Subchapter B. Noncompliance with Division

9625. Remedies for secured party's failure to comply withdivision.

9626. Action in which deficiency or surplus is in issue. 9627. Determination of whether conduct was commercially

reasonable. 9628. Nonliability and limitation on liability of secured

party; liability of secondary obligor.

Chapter 97. Transition Provisions

9700. Definitions. 9701. Effective date. 9702. Savings clause. 9703. Security interest perfected before effective date.


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9704. Security interest unperfected before effective date. 9705. Effectiveness of action taken before effective date. 9706. When initial financing statement suffices to continue

effectiveness of financing statement. 9707. Amendment of pre-effective-date financing statement. 9708. Persons entitled to file initial financing statement

or continuation statement. 9709. Priority. 9710. Operations of prothonotaries' offices after effective

date.

TITLE 13COMMERCIAL CODE

Division1. General Provisions2. Sales2A. Leases3. Negotiable Instruments4. Bank Deposits and Collections4A. Funds Transfers5. Letters of Credit

6. Bulk Transfers (Repealed)7. Warehouse Receipts, Bills of Lading and Other Documentsof Title

8. Investment Securities9. Secured Transactions

Enactment. Unless otherwise noted, the provisions of Title13 were added November 1, 1979, P.L.255, No.86, effectiveJanuary 1, 1980.

Saved from Suspension. Pennsylvania Rule of Civil Procedurefor District Justices No. 482, adopted November 7, 1988,provided that section 1101 et seq. shall not be deemed suspendedor affected. Rules 401 through 482 relate to execution ofjudgments for the payment of money rendered by districtjustices. Act 207 of 2004 changed district justices tomagisterial district judges. Rule 482 can now be found in theRules of Conduct, Office Standards and Civil Procedure forMagisterial District Judges.

Pennsylvania Rule of Civil Procedure No. 3159(b)(2), adoptedApril 20, 1998, provided that sections 1101 et seq. shall notbe deemed suspended or affected by Rules 3101 through 3149relating to enforcement of money judgments for the payment ofmoney.

Special Provisions in Appendix. See Act 86 of 1979 in theappendix to this title for special provisions relating tolegislative intent and effective date.

Short Titles of Implementing Statutes. Section 1 of Act 97of 1992 provided that the act shall be known and may be citedas the Uniform Commercial Code Modernization Act.

Section 1 of Act 44 of 1996 provided that the act shall beknown and may be cited as the Uniform Commercial CodeModernization Act of 1996.

Section 1 of Act 18 of 2001 provided that the act shall beknown and may be cited as the Uniform Commercial CodeModernization Act of 2001.

DIVISION 1GENERAL PROVISIONS


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Chapter11. General Provisions12. General Definitions and Principles of Interpretation13. Territorial Applicability and General Rules

Enactment. Division 1 was added April 16, 2008, P.L.57,No.13, effective in 60 days.

Prior Provisions. Former Division 1, which related to thesame subject matter, was added November 1, 1979, P.L.255, No.86,

and repealed April 16, 2008, P.L.57, No.13, effective in 60days.

CHAPTER 11GENERAL PROVISIONS

Sec.1101. Short titles.1102. Scope of division.1103. Construction of title to promote its purposes and

policies; applicability of supplemental principles oflaw.

1104. Construction against implied repeal.1105. (Reserved).1106. Use of singular and plural; gender.1107. Section captions.1108. Relation to Electronic Signatures in Global and National

Commerce Act.

Enactment. Chapter 11 was added April 16, 2008, P.L.57,No.13, effective in 60 days.

Prior Provisions. Former Chapter 11, which related to shorttitle, construction, application and subject matter of title,was added November 1, 1979, P.L.255, No.86, and repealed April16, 2008, P.L.57, No.13, effective in 60 days.

1 101 . S hor t t it le s.(a) Title.--This title may be cited as the UniformCommercial Code.

(b) Division.--This division may be cited as the UniformCommercial Code-General Provisions. 1 102 . S cop e o f di vis io n.

This division applies to a transaction to the extent thatit is governed by another division of this title. 1103. Construction of title to promote its purposes and

pol ici es; app lic abili ty of sup pleme nta l princ ipl esof law.

(a) Liberal construction.--This title must be liberallyconstrued and applied to promote its underlying purposes and

policies, which are:(1) to simplify, clarify and modernize the law governingcommercial transactions;

(2) to permit the continued expansion of commercialpractices through custom, usage and agreement of the parties;and

(3) to make uniform the law among the variousjurisdictions.(b ) L aw a nd e qu it y. --Unless displaced by the particular

provisions of this title, the principles of law and equity,including the law merchant and the law relative to capacity tocontract, principal and agent, estoppel, fraud,


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misrepresentation, duress, coercion, mistake, bankruptcy andother validating or invalidating cause, supplement itsprovisions. 1104. Construction against implied repeal.

This title being a general act intended as a unified coverageof its subject matter, no part of it shall be deemed to beimpliedly repealed by subsequent legislation if suchconstruction can reasonably be avoided. 1105. (Reserved). 1106. Use of singular and plural; gender (Reserved).

1107. Section captions.Notwithstanding 1 Pa.C.S. 1924 (relating to constructionof titles, preambles, provisos, exceptions and headings),section captions are part of this title. 1108. Relation to Electronic Signatures in Global and

Nat ion al Comme rce Act .This division modifies, limits and supersedes the Electronic

Signatures in Global and National Commerce Act (Public Law 106-229, 15 U.S.C. 7001 et seq.), but does not modify, limit orsupersede section 101(c) of that act (15 U.S.C. 7001(c)) orauthorize electronic delivery of any of the notices describedin section 103(b) of that act (15 U.S.C. 7003(b)).

SUBCHAPTER CESCAPED INMATES

Sec.1161. Return of escaped inmates.1162. Escaped inmate costs.1163. Maintenance of escaping inmates under new sentence.1164. Criminal offense during confinement.

CHAPTER 12GENERAL DEFINITIONS AND PRINCIPLES

OF INTERPRETATION

Sec.1201. General definitions.1202. Notice; knowledge.1203. Lease distinguished from security interest.1204. Value.1205. Reasonable time; seasonableness.1206. Presumptions.

Enactment. Chapter 12 was added April 16, 2008, P.L.57,No.13, effective in 60 days.

Prior Provisions. Former Chapter 12, which related to the

same subject matter, was added November 1, 1979, P.L.255, No.86,and repealed April 16, 2008, P.L.57, No.13, effective in 60days. 1201. General definitions.

(a) Definition provisions.--Unless the context otherwiserequires, words or phrases defined in this section, or in theadditional definitions contained in other divisions of thistitle that apply to particular divisions or chapters of thistitle, have the meanings stated.

(b) Definitions.--Subject to additional definitionscontained in subsequent provisions of this title which areapplicable to specific provisions of this title, the followingwords and phrases when used in this title shall have, unless


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the context clearly indicates otherwise, the meanings given tothem in this subsection:

(1) "Action." In the sense of a judicial proceeding,the term includes recoupment, counterclaim, set-off, suitin equity and any other proceeding in which rights aredetermined.

(2) "Aggrieved party." A party entitled to pursue aremedy.

(3) "Agreement." As distinguished from "contract" underparagraph (12), the term means the bargain of the parties

in fact, as found in their language or inferred from othercircumstances, including course of performance, course ofdealing or usage of trade as provided in section 1303(relating to course of performance, course of dealing andusage of trade).

(4) "Bank." A person engaged in the business ofbanking. The term includes a savings bank, savings and loanassociation, credit union and trust company.

(5) "Bearer." A person in control of a negotiableelectronic document of title or a person in possession of anegotiable instrument, negotiable tangible document of titleor certificated security, that is payable to bearer orindorsed in blank.

(6) "Bill of lading." A document of title evidencingthe receipt of goods for shipment issued by a person engagedin the business of directly or indirectly transporting orforwarding goods. The term does not include a warehousereceipt.

(7) "Branch." The term includes a separatelyincorporated foreign branch of a bank.

(8) "Burden of establishing." As to a fact, the burdenof persuading the trier of fact that the existence of thefact is more probable than its nonexistence.

(9) "Buyer in ordinary course of business." A personthat buys goods in good faith, without knowledge that thesale violates the rights of another person in the goods, andin the ordinary course from a person, other than apawnbroker, in the business of selling goods of that kind.

(i) A person buys goods in the ordinary course ofbusiness if the sale to the person comports with theusual or customary practices in the kind of business inwhich the seller is engaged or with the seller's ownusual or customary practices.

(ii) A person that sells oil, gas or other mineralsat the wellhead or minehead is a person in the businessof selling goods of that kind.

(iii) A buyer in ordinary course of business maybuy for cash, by exchange of other property or on securedor unsecured credit and may acquire goods or documentsof title under a preexisting contract for sale.

(iv) Only a buyer that takes possession of the goodsor has a right to recover the goods from the seller underDivision 2 (relating to sales) may be a buyer in ordinarycourse of business.

The term does not include a person that acquires goods in atransfer in bulk or as security for or in total or partialsatisfaction of a money debt.

(10) "Conspicuous." With reference to a term, meansso written, displayed or presented that a reasonable personagainst which it is to operate ought to have noticed it.Whether a term is "conspicuous" or not is a decision for thecourt. Conspicuous terms include the following:


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(i) A heading in capitals equal to or greater insize than the surrounding text, or in contrasting type,font or color to the surrounding text of the same orlesser size.

(ii) Language in the body of a record or displayin larger type than the surrounding text, in contrastingtype, font or color to the surrounding text of the samesize, or set off from surrounding text of the same sizeby symbols or other marks that call attention to thelanguage.

(11) "Consumer." An individual who enters into atransaction primarily for personal, family or householdpurposes.

(12) "Contract." As distinguished from "agreement" inparagraph (3), the total legal obligation that results fromthe parties' agreement as determined by this title assupplemented by any other applicable laws.

(13) "Creditor." The term includes a general creditor;a secured creditor; a lien creditor; a representative ofcreditors, including an assignee for the benefit ofcreditors; a trustee in bankruptcy; a receiver in equity andan executor or administrator of an insolvent debtor's orassignor's estate.

(14) "Defendant." Includes a person in the positionof defendant in a counterclaim, cross-claim or third-partyclaim.

(15) "Delivery." With respect to an electronic documentof title, means voluntary transfer of control and withrespect to an instrument, a tangible document of title orchattel paper, means voluntary transfer of possession.

(16) "Document of title." A record that:(i) in the regular course of business or financing

is treated as adequately evidencing that the person inpossession or control of the record is entitled toreceive, control, hold and dispose of the record and thegoods the record covers; or

(ii) purports to be issued by or addressed to abailee and to cover goods in the bailee's possessionwhich are either identified or are fungible portions ofan identified mass.

The term includes a bill of lading, transport document, dockwarrant, dock receipt, warehouse receipt and order fordelivery of goods.

(16.1) "Electronic document of title." A document oftitle evidenced by a record consisting of information storedin an electronic medium.

(17) "Fault." A default, breach or wrongful act oromission.

(18) "Fungible goods." As follows:(i) goods of which any unit, by nature or usage of

trade, is the equivalent of any other like unit; or(ii) goods that by agreement are treated as

equivalent.(19) "Genuine." Free of forgery or counterfeiting.(20) "Good faith." Except as otherwise provided in

Division 5 (relating to letters of credit), honesty in factand the observance of reasonable commercial standards offair dealing.

(21) "Holder." As follows:(i) the person in possession of a negotiable

instrument that is payable either to the bearer or toan identified person that is the person in possession;


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(ii) the person in possession of a negotiabletangible document of title if the goods are deliverableeither to the bearer or to the order of the person inpossession; or

(iii) the person in control of a negotiableelectronic document of title.(22) "Insolvency proceeding." Includes an assignment

for the benefit of creditors or other proceeding intendedto liquidate or rehabilitate the estate of the personinvolved.

(23) "Insolvent." As follows:(i) having generally ceased to pay debts in theordinary course of business other than as a result ofbona fide dispute;

(ii) being unable to pay debts as they become due;or

(iii) being insolvent within the meaning of Federalbankruptcy law.(24) "Money." A medium of exchange currently authorized

or adopted by a domestic or foreign government. The termincludes a monetary unit of account established by anintergovernmental organization or by agreement between twoor more countries.

(25) "Organization." A person other than an individual.(26) "Party." As distinguished from "third party," aperson that has engaged in a transaction or made an agreementsubject to this title.

(27) "Person." Any individual; corporation; businesstrust; estate; trust; partnership; limited liability company;association; joint venture; government; governmentalsubdivision, agency or instrumentality, public corporation;or other legal or commercial entity.

(28) "Present value." The amount as of a date certainof one or more sums payable in the future, discounted to thedate certain by use of either:

(i) an interest rate specified by the parties ifthat rate is not manifestly unreasonable at the time thetransaction is entered into; or

(ii) if an interest rate is not so specified, acommercially reasonable rate that takes into account thefacts and circumstances at the time the transaction isentered into.(29) "Purchase." Taking by sale, lease, discount,

negotiation, mortgage, pledge, lien, security interest, issueor reissue, gift or other voluntary transaction creating aninterest in property.

(30) "Purchaser." A person that takes by purchase.(31) "Record." Information that is inscribed on a

tangible medium or that is stored in an electronic or othermedium and is retrievable in perceivable form.

(32) "Remedy." Any remedial right to which an aggrievedparty is entitled with or without resort to a tribunal.

(33) "Representative." A person empowered to act foranother, including an agent; an officer of a corporation orassociation; and a trustee, executor or administrator of anestate.

(34) "Right." Includes remedy.(35) "Security interest." An interest in personal

property or fixtures which secures payment or performanceof an obligation.

(i) The term includes any interest of a consignorand a buyer of accounts, chattel paper, a payment


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(44) "Written." Includes printing, typewriting or anyother intentional reduction to tangible form.

Cross References. Section 1201 is referred to in sections3103, 4A105, 8103 of this title; section 6902 of Title 42(Judiciary and Judicial Procedure); section 7315 of Title 51(Military Affairs). 1202. Notice; knowledge.

(a) Notice.--Subject to subsection (f), a person has noticeof 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 itexists.(b) Knowledge.--"Knowledge" means actual knowledge. "Knows"

has a corresponding meaning.(c) Reason to know distinguished.--"Discover," "learn" or

words of similar import refer to knowledge rather than to reasonto know.

(d) Notify.--A person notifies or gives a notice ornotification to another person by taking such steps as may bereasonably required to inform the other person in ordinary

course, whether or not the other person actually comes to knowof it.(e) Be notified.--Subject to subsection (f), a person

receives a notice or notification when:(1) it comes to that person's attention; or(2) it is duly delivered in a form reasonable under the

circumstances at:(i) the place of business through which the contract

was made; or(ii) another location held out by that person as

the place for receipt of such communications.(f) Communication to organizations.--Notice, knowledge or

notice or notification received by an organization is effective

for a particular transaction from the time it is brought to theattention of the individual conducting that transaction and,in any event, from the time it would have been brought to theindividual's attention if the organization had exercised duediligence. An organization exercises due diligence if itmaintains reasonable routines for communicating significantinformation to the person conducting the transaction and thereis reasonable compliance with the routines. Due diligence doesnot require an individual acting for the organization tocommunicate information unless the communication is part of theindividual's regular duties or the individual has reason toknow of the transaction and that the transaction would bematerially affected by the information. 1203. Lease distinguished from security interest.

(a) Factual determination.--Whether a transaction in theform of a lease creates a lease or security interest isdetermined by the facts of each case.

(b) Sufficient attributes for security interest.--Atransaction in the form of a lease creates a security interestif the consideration that the lessee is to pay the lessor forthe right to possession and use of the goods is an obligationfor the term of the lease and is not subject to termination bythe lessee, and:

(1) the original term of the lease is equal to orgreater than the remaining economic life of the goods;


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or not drawn upon and whether or not a charge-back isprovided for in the event of difficulties in collection;

(2) as security for or in total or partial satisfactionof a preexisting claim;

(3) by accepting delivery under a preexisting contractfor purchase; or

(4) in return for any consideration sufficient tosupport a simple contract.

1205. Reasonable time; seasonableness.(a) Reasonable time.--Whether a time for taking an action

required by this title is reasonable depends on the nature,purpose and circumstances of the action.(b) Seasonableness.--An action is taken seasonably if it

is taken at or within the time agreed or, if no time is agreed,at or within a reasonable time.

Cross References. Section 1205 is referred to in section4A204 of this title. 1206. Presumptions.

Whenever this title creates a "presumption" with respect toa fact or provides that a fact is "presumed," the trier of factmust find the existence of the fact unless and until evidenceis introduced that supports a finding of its nonexistence.

Cross References. Section 1206 is referred to in section2201 of this title.

CHAPTER 13TERRITORIAL APPLICABILITY AND GENERAL RULES

Sec.1301. Territorial applicability; parties' power to choose

applicable law.1302. Variation by agreement.1303. Course of performance, course of dealing and usage of

trade.

1304. Obligation of good faith.1305. Remedies to be liberally administered.1306. Waiver or renunciation of claim or right after breach.1307. Prima facie evidence by third-party documents.1308. Performance or acceptance under reservation of rights.1309. Option to accelerate at will.1310. Subordinated obligations.

Enactment. Chapter 13 was added April 16, 2008, P.L.57,No.13, effective in 60 days. 1301. Territorial applicability; parties' power to choose

applicable law.(a) Agreement; reasonable relation requirement.--Except as

otherwise provided in this section, when a transaction bears areasonable relation to this Commonwealth and also to anotherstate or nation, the parties may agree that the law either ofthis Commonwealth or of such other state or nation shall governtheir rights and duties.

(b) Absence of agreement; approved relation requirement.--Inthe absence of an agreement effective under subsection (a), andexcept as provided in subsection (c), this title applies totransactions bearing an appropriate relation to thisCommonwealth.

(c) Mandatory applicability of title.--If one of thefollowing provisions of this title specifies the applicable


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law, that provision governs, and a contrary agreement iseffective only to the extent permitted by the law so specified:

(1) Section 2402 (relating to rights of creditors ofseller against sold goods).

(2) Sections 2A105 (relating to territorial applicationof division to goods covered by certificate of title) and2A106 (relating to limitation on power of parties to consumerlease to choose applicable law and judicial forum).

(3) Section 4102 (relating to applicability).(4) Section 4A507 (relating to choice of law).

(5) Section 5116 (relating to choice of law and forum).(6) Section 8110 (relating to applicability; choice oflaw).

(7) Ch. 93 Subch. A (relating to law governingperfection and priority).

1302. Variation by agreement.(a) General rule.--Except as otherwise provided in

subsection (b) or elsewhere in this title, the effect ofprovisions of this title may be varied by agreement.

(b) Exceptions.--The obligations of good faith, diligence,reasonableness and care prescribed by this title may not bedisclaimed by agreement. The parties, by agreement, maydetermine the standards by which the performance of those

obligations is to be measured if those standards are notmanifestly unreasonable. Whenever this title requires an actionto be taken within a reasonable time, a time that is notmanifestly unreasonable may be fixed by agreement.

(c) Effect of terminology.--The presence in certainprovisions of this title of the phrase "unless otherwiseagreed," or words of similar import, does not imply that theeffect of other provisions may not be varied by agreement underthis section.

Cross References. Section 1302 is referred to in sections2A518, 2A519, 2A527, 2A528, 5103 of this title. 1303. Course of performance, course of dealing and usage of

trade.(a) Course of performance.--A "course of performance" is asequence of conduct between the parties to a particulartransaction that exists if:

(1) the agreement of the parties with respect to thetransaction involves repeated occasions for performance bya party; and

(2) the other party, with knowledge of the nature ofthe performance and opportunity for objection to it, acceptsthe performance or acquiesces in it without objection.(b) Course of dealing.--A "course of dealing" is a sequence

of conduct concerning previous transactions between the partiesto a particular transaction that is fairly to be regarded as

establishing a common basis of understanding for interpretingtheir expressions and other conduct.(c) Usage of trade.--A "usage of trade" is any practice or

method of dealing having such regularity of observance in aplace, vocation or trade as to justify an expectation that itwill be observed with respect to the transaction in question.The existence and scope of such a usage must be proved as fact.If it is established that such a usage is embodied in a tradecode or similar record, the interpretation of the record is aquestion of law.

(d) Evidentiary effect.--A course of performance or courseof dealing between the parties or usage of trade in the vocationor trade in which they are engaged or of which they are or


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should be aware is relevant in ascertaining the meaning of theparties' agreement, may give particular meaning to specificterms of the agreement and may supplement or qualify the termsof the agreement. A usage of trade applicable in the place inwhich part of the performance under the agreement is to occurmay be so utilized as to that part of the performance.

(e) Construction in general.--Except as otherwise providedin subsection (f), the express terms of an agreement and anyapplicable course of performance, course of dealing or usageof trade must be construed whenever reasonable as consistent

with each other. If such a 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 ofdealing and usage of trade; and

(3) course of dealing prevails over usage of trade.(f) Waiver or modification.--Subject to section 2209

(relating to modification, rescission and waiver), a course ofperformance is relevant to show a waiver or modification of anyterm inconsistent with the course of performance.

(g) Evidence.--Evidence of a relevant usage of trade offeredby one party is not admissible unless that party has given theother party notice that the court finds sufficient to prevent

unfair surprise to the other party.

Cross References. Section 1303 is referred to in sections1201, 2202 of this title. 1304. Obligation of good faith.

Every contract or duty within this title imposes anobligation of good faith in its performance and enforcement. 1305. Remedies to be liberally administered.

(a) Administration.--The remedies provided by this titlemust be liberally administered to the end that the aggrievedparty may be put in as good a position as if the other partyhad fully performed, but neither consequential or specialdamages nor penal damages may be had except as specifically

provided in this title or by other rule of law.(b) Enforceability.--Any right or obligation declared bythis title is enforceable by action unless the provisiondeclaring it specifies a different and limited effect.

Cross References. Section 1305 is referred to in section2A501 of this title. 1306. Waiver or renunciation of claim or right after breach.

A claim or right arising out of an alleged breach may bedischarged in whole or in part without consideration byagreement of the aggrieved party in an authenticated record. 1307. Prima facie evidence by third-party documents.

A document in due form purporting to be a bill of lading, a

policy or certificate of insurance, an official weigher's orinspector's certificate, a consular invoice or any otherdocument authorized or required by the contract to be issuedby a third party is prima facie evidence of its own authenticityand genuineness and of the facts stated in the document by thethird party. 1308. Performance or acceptance under reservation of rights.

(a) General rule.--Except as set forth in subsection (b),a party that with explicit reservation of rights performs orpromises performance or assents to performance in a mannerdemanded or offered by the other party does not therebyprejudice the rights reserved. The words "without prejudice,""under protest" and the like are sufficient.


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(b) Exception.--Subsection (a) does not apply to an accordand satisfaction. 1309. Option to accelerate at will.

A term providing that one party or that party's successorin interest may accelerate payment or performance or requirecollateral or additional collateral "at will" or when the party"deems itself insecure," or words of similar import, means thatthe party has power to do so only if that party in good faithbelieves that the prospect of payment or performance isimpaired. The burden of establishing lack of good faith is on

the party against which the power has been exercised. 1310. Subordinated obligations.An obligation may be issued as subordinated to performance

of another obligation of the person obligated, or a creditormay subordinate its right to performance of an obligation byagreement with either the person obligated or another creditorof the person obligated. Subordination does not create asecurity interest as against either the common debtor or asubordinated creditor.

DIVISION 2SALES

Chapter21. Short Title, General Construction and Subject Matter22. Form, Formation and Readjustment of Contract23. General Obligation and Construction of Contract24. Title, Creditors and Good Faith Purchasers25. Performance26. Breach, Repudiation and Excuse27. Remedies

Enactment. Division 2 was added November 1, 1979, P.L.255,No.86, effective January 1, 1980.

CHAPTER 21SHORT TITLE, GENERAL CONSTRUCTION

AND SUBJECT MATTER

Sec.2101. Short title of division.2102. Scope; certain security and other transactions excluded

from division.2103. Definitions and index of definitions.2104. Definitions: "merchant"; "between merchants"; "financing

agency."2105. Definitions: transferability; "goods"; "future" goods;

"lot"; "commercial unit."2106. Definitions: "contract"; "agreement"; "contract for

sale"; "sale"; "present sale"; "conforming" to contract;"termination"; "cancellation."

2107. Goods to be severed from realty: recording.

Enactment. Chapter 21 was added November 1, 1979, P.L.255,No.86, effective January 1, 1980. 2101. Short title of division.

This division shall be known and may be cited as the UniformCommercial Code, Article 2, Sales.(July 9, 1992, P.L.507, No.97, eff. one year)


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2102. Scope; certain security and other transactions excludedfrom division.

Unless the context otherwise requires, this division appliesto transactions in goods; it does not apply to any transactionwhich although in the form of an unconditional contract to sellor present sale is intended to operate only as a securitytransaction, nor does this division impair or repeal any statuteregulating sales to consumers, farmers or other specifiedclasses of buyers. 2103. Definitions and index of definitions.

(a) Definitions.--The following words and phrases when usedin this division shall have, unless the context clearlyindicates otherwise, the meanings given to them in thissubsection:

"Buyer." A person who buys or contracts to buy goods."Good faith." (Deleted by amendment)."Receipt." Receipt of goods means taking physical possession

of them."Seller." A person who sells or contracts to sell goods.(b) Index of other definitions in division.--Other

definitions applying to this division or to specified chaptersthereof, and the sections in which they appear are:

"Acceptance." Section 2606.

"Banker's credit." Section 2325."Between merchants." Section 2104."Cancellation." Section 2106(d)."Commercial unit." Section 2105."Confirmed credit." Section 2325."Conforming to contract." Section 2106."Contract for sale." Section 2106."Cover." Section 2712."Entrusting." Section 2403."Financing agency." Section 2104."Future goods." Section 2105."Goods." Section 2105."Identification." Section 2501."Installment contract." Section 2612."Letter of credit." Section 2325."Lot." Section 2105."Merchant." Section 2104."Overseas." Section 2323."Person in position of seller." Section 2707."Present sale." Section 2106."Sale." Section 2106."Sale on approval." Section 2326."Sale or return." Section 2326."Termination." Section 2106.(c) Index of definitions in other divisions.--The following

definitions in other divisions apply to this division:"Check." Section 3104."Consignee." Section 7102."Consignor." Section 7102."Consumer goods." Section 9102."Control." Section 7106."Dishonor." Section 3502."Draft." Section 3104.(d) Applicability of general definitions and principles.--In

addition, Division 1 (relating to general provisions) containsgeneral definitions and principles of construction andinterpretation applicable throughout this division.


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(July 9, 1992, P.L.507, No.97, eff. one year; June 8, 2001,P.L.123, No.18, eff. July 1, 2001; Apr. 16, 2008, P.L.57, No.13,eff. 60 days)

2008 Amendment. Act 13 deleted the def. of "good faith" insubsec. (a) and added the def. of "control" in subsec. (c).

2001 Amendment. Act 18 amended subsec. (c).Cross References. Section 2103 is referred to in section

7102 of this title. 2104. Definitions: "merchant"; "between merchants";

"financing agency."The following words and phrases when used in this division

shall have the meanings given to them in this section:"Between merchants." Between merchants means in any

transaction with respect to which both parties are chargeablewith the knowledge or skill of merchants.

"Financing agency." Any bank, finance company, or otherperson who in the ordinary course of business makes advancesagainst goods or documents of title or who by arrangement witheither the seller or the buyer intervenes in ordinary courseto make or collect payment due or claimed under the contractfor sale, as by purchasing or paying the draft of the selleror making advances against it or by merely taking it for

collection whether or not documents of title accompany or areassociated with the draft. The term includes also a bank orother person who similarly intervenes between persons who arein the position of seller and buyer in respect to the goods(see section 2707).

"Merchant." A person who:(1) deals in goods of the kind; or(2) otherwise by his occupation holds himself out as

having knowledge or skill peculiar to the practices or goodsinvolved in the transaction or to whom such knowledge orskill may be attributed by his employment of an agent orbroker or other intermediary who by his occupation holdshimself out as having such knowledge or skill.

(June 8, 2001, P.L.123, No.18, eff. July 1, 2001; Apr. 16, 2008,P.L.57, No.13, eff. 60 days)

2008 Amendment. Act 13 amended the def. of "financingagency."

Cross References. Section 2104 is referred to in sections2103, 2A103, 9102 of this title. 2105. Definitions: transferability; "goods"; "future" goods;

"lot"; "commercial unit."(a) "Goods".--"Goods" means all things (including specially

manufactured goods) which are movable at the time ofidentification to the contract for sale other than the moneyin which the price is to be paid, investment securities

(Division 8) and things in action. "Goods" also includes theunborn young of animals and growing crops and other identifiedthings attached to realty as described in section 2107 (relatingto goods to be severed from realty; recording).

(b) Transferability; "future" goods.--Goods must be bothexisting and identified before any interest in them can pass.Goods which are not both existing and identified are "future"goods. A purported present sale of future goods or of anyinterest therein operates as a contract to sell.

(c) Sale of part interest in goods.--There may be a saleof a part interest in existing identified goods.


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(d) Fungible goods.--An undivided share in an identifiedbulk of fungible goods is sufficiently identified to be soldalthough the quantity of the bulk is not determined. Any agreedproportion of such a bulk or any quantity thereof agreed uponby number, weight or other measure may to the extent of theinterest of the seller in the bulk be sold to the buyer whothen becomes an owner in common.

(e) "Lot".--"Lot" means a parcel or a single article whichis the subject matter of a separate sale or delivery, whetheror not it is sufficient to perform the contract.

(f) "Commercial unit".--"Commercial unit" means such a unitof goods as by commercial usage is a single whole for purposesof sale and division of which materially impairs its characteror value on the market or in use. A commercial unit may be asingle article (as a machine) or a set of articles (as a suiteof furniture or an assortment of sizes) or a quantity (as abale, gross, or carload) or any other unit treated in use orin the relevant market as a single whole.

Cross References. Section 2105 is referred to in section2103 of this title. 2106. Definitions: "contract"; "agreement"; "contract for

sale"; "sale"; "present sale"; "conforming" to

contract; "termination"; "cancellation."(a) "Contract", "agreement", "sale".--In this divisionunless the context otherwise requires "contract" and "agreement"are limited to those relating to the present or future sale ofgoods. "Contract for sale" includes both a present sale of goodsand a contract to sell goods at a future time. A "sale" consistsin the passing of title from the seller to the buyer for a price(section 2401). A "present sale" means a sale which isaccomplished by the making of the contract.

(b) "Conforming" to contract.--Goods or conduct includingany part of a performance are "conforming" or conform to thecontract when they are in accordance with the obligations underthe contract.

(c) "Termination".--"Termination" occurs when either partypursuant to a power created by agreement or law puts an end tothe contract otherwise than for its breach. On "termination"all obligations which are still executory on both sides aredischarged but any right based on prior breach or performancesurvives.

(d) "Cancellation".--"Cancellation" occurs when either partyputs an end to the contract for breach by the other and itseffect is the same as that of "termination" except that thecancelling party also retains any remedy for breach of the wholecontract or any unperformed balance.

Cross References. Section 2106 is referred to in sections

2103, 2A103, 7102, 9102 of this title. 2107. Goods to be severed from realty: recording.(a) Minerals and structures.--A contract for the sale of

minerals or the like (including oil and gas) or a structure orits materials to be removed from realty is a contract for thesale of goods within this division if they are to be severedby the seller but until severance a purported present salethereof which is not effective as a transfer of an interest inland is effective only as a contract to sell.

(b) Other property severable without material harm.--Acontract for the sale apart from the land of growing crops orother things attached to realty and capable of severance withoutmaterial harm thereto but not described in subsection (a) or


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of timber to be cut is a contract for the sale of goods withinthis division whether the subject matter is to be severed bythe buyer or by the seller even though it forms part of therealty at the time of contracting, and the parties can byidentification effect a present sale before severance.

(c) Recording.--The provisions of this section are subjectto any third party rights provided by the law relating to realtyrecords, and the contract for sale may be executed and recordedas a document transferring an interest in land and shall thenconstitute notice to third parties of the rights of the buyer

under the contract for sale.(Nov. 26, 1982, P.L.696, No.201, eff. 180 days)

Cross References. Section 2107 is referred to in section2105 of this title.

CHAPTER 22FORM, FORMATION AND READJUSTMENT

OF CONTRACT

Sec.2201. Formal requirements; statute of frauds.

2202. Final written expression: parol or extrinsic evidence.2203. Seals inoperative.2204. Formation in general.2205. Firm offers.2206. Offer and acceptance in formation of contract.2207. Additional terms in acceptance or confirmation.2208. Course of performance or practical construction (Deleted

by amendment).2209. Modification, rescission and waiver.2210. Delegation of performance; assignment of rights.

Enactment. Chapter 22 was added November 1, 1979, P.L.255,No.86, effective January 1, 1980.

2201. Formal requirements; statute of frauds.(a) General rule.--Except as otherwise provided in thissection a contract for the sale of goods for the price of $500or more is not enforceable by way of action or defense unlessthere is some writing sufficient to indicate that a contractfor sale has been made between the parties and signed by theparty against whom enforcement is sought or by his authorizedagent or broker. A writing is not insufficient because it omitsor incorrectly states a term agreed upon but the contract isnot enforceable under this subsection beyond the quantity ofgoods shown in such writing.

(b) Writing confirming contract between merchants.--Betweenmerchants if within a reasonable time a writing in confirmation

of the contract and sufficient against the sender is receivedand the party receiving it has reason to know its contents, itsatisfies the requirements of subsection (a) against such partyunless written notice of objection to its contents is givenwithin ten days after it is received.

(c) Enforceability of contracts not satisfying generalrequirements.--A contract which does not satisfy therequirements of subsection (a) but which is valid in otherrespects is enforceable:

(1) if the goods are to be specially manufactured forthe buyer and are not suitable for sale to others in theordinary course of the business of the seller and the seller,before notice of repudiation is received and under


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circumstances which reasonably indicate that the goods arefor the buyer, has made either a substantial beginning oftheir manufacture or commitments for their procurement;

(2) if the party against whom enforcement is soughtadmits in his pleading, testimony or otherwise in court thata contract for sale was made, but the contract is notenforceable under this provision beyond the quantity of goodsadmitted; or

(3) with respect to goods for which payment has beenmade and accepted or which have been received and accepted

(section 2606).(d) Qualified financial contracts.--Subsection (a) does notapply to a qualified financial contract, as defined in section1206(c)(1) (relating to statute of frauds for kinds of personalproperty not otherwise covered), if either:

(1) there is, as provided in section 1206(c)(3),sufficient evidence to indicate that a contract has beenmade; or

(2) the parties, by means of a prior or subsequentwritten contract, have agreed to be bound by the terms ofthe qualified financial contract from the time they reachagreement (by telephone, by exchange of electronic messagesor otherwise) on those terms.

(May 22, 1996, P.L.248, No.44, eff. imd.)1996 Amendment. Act 44 added subsec. (d). See section 14(c)

of Act 44 in the appendix to this title for special provisionsrelating to applicability to qualified financial contracts.

References in Text. Section 1206, referred to in thissection, was repealed and added by the act of April 16, 2008(P.L.57, No.13). Present section 1206 relates to presumptions.

Cross References. Section 2201 is referred to in sections2209, 2326 of this title. 2202. Final written expression: parol or extrinsic evidence.

Terms with respect to which the confirmatory memoranda ofthe parties agree or which are otherwise set forth in a writing

intended by the parties as a final expression of their agreementwith respect to such terms as are included therein may not becontradicted by evidence of any prior agreement or of acontemporaneous oral agreement but may be explained orsupplemented:

(1) by course of performance, course of dealing or usageof trade (section 1303); and

(2) by evidence of consistent additional terms unlessthe court finds the writing to have been intended also as acomplete and exclusive statement of the terms of theagreement.

(Apr. 16, 2008, P.L.57, No.13, eff. 60 days)

Cross References. Section 2202 is referred to in sections2316, 2326 of this title. 2203. Seals inoperative.

The affixing of a seal to a writing evidencing a contractfor sale or an offer to buy or sell goods does not constitutethe writing a sealed instrument and the law with respect tosealed instruments does not apply to such a contract or offer. 2204. Formation in general.

(a) General rule.--A contract for sale of goods may be madein any manner sufficient to show agreement, including conductby both parties which recognizes the existence of such acontract.


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(b) Effect of undetermined time of making agreement.--Anagreement sufficient to constitute a contract for sale may befound even though the moment of its making is undetermined.

(c ) E ffe ct o f o p en t er ms .- -Even though one or more termsare left open a contract for sale does not fail forindefiniteness if the parties have intended to make a contractand there is a reasonably certain basis for giving anappropriate remedy.

Cross References. Section 2204 is referred to in section

2311 of this title. 2 205 . F irm o ff ers .An offer by a merchant to buy or sell goods in a signed

writing which by its terms gives assurance that it will be heldopen is not revocable, for lack of consideration, during thetime stated or if no time is stated for a reasonable time, butin no event may such period of irrevocability exceed threemonths; but any such term of assurance on a form supplied bythe offeree must be separately signed by the offeror. 2206. Offer and acceptance in formation of contract.

(a) General rule.--Unless otherwise unambiguously indicatedby the language or circumstances:

(1) an offer to make a contract shall be construed as

inviting acceptance in any manner and by any mediumreasonable in the circumstances; and(2) an order or other offer to buy goods for prompt or

current shipment shall be construed as inviting acceptanceeither by a prompt promise to ship or by the prompt orcurrent shipment of conforming or nonconforming goods, butsuch a shipment of nonconforming goods does not constitutean acceptance if the seller seasonably notifies the buyerthat the shipment is offered only as an accommodation to thebuyer.(b) Beginning requested performance without notice.--Where

the beginning of a requested performance is a reasonable modeof acceptance an offeror who is not notified of acceptance

within a reasonable time may treat the offer as having lapsedbefore acceptance. 2207. Additional terms in acceptance or confirmation.

(a) General rule.--A definite and seasonable expression ofacceptance or a written confirmation which is sent within areasonable time operates as an acceptance even though it statesterms additional to or different from those offered or agreedupon, unless acceptance is expressly made conditional on assentto the additional or different terms.

(b) Effect on contract.--The additional terms are to beconstrued as proposals for addition to the contract. Betweenmerchants such 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 ofthem is received.(c) Conduct establishing contract.--Conduct by both parties

which recognizes the existence of a contract is sufficient toestablish a contract for sale although the writings of theparties do not otherwise establish a contract. In such case theterms of the particular contract consist of those terms on whichthe writings of the parties agree, together with anysupplementary terms incorporated under any other provisions ofthis title.


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seller. Even in that event, the creation, attachment, perfectionand enforcement of the security interest remain effective, but:

(1) the seller is liable to the buyer for damages causedby the delegation to the extent that the damages could notreasonably be prevented by the buyer; and

(2) a court having jurisdiction may grant otherappropriate relief, including cancellation of the contractfor sale or an injunction against enforcement of the securityinterest or consummation of the enforcement.(d) Assignment prohibition limited to performance.--Unless

the circumstances indicate the contrary, a prohibition ofassignment of "the contract" is to be construed as barring onlythe delegation to the assignee of the performance of theassignor.

(e) Effect and enforceability of general assignment.--Anassignment of "the contract" or of "all my rights under thecontract" or an assignment in similar general terms is anassignment of rights and unless the language or thecircumstances (as in an assignment for security) indicate thecontrary, it is a delegation of performance of the duties ofthe assignor and its acceptance by the assignee constitutes apromise by him to perform those duties. This promise isenforceable by either the assignor or the other party to the

original contract.(f) Security for assignment delegating performance.--Theother party may treat any assignment which delegates performanceas creating reasonable grounds for insecurity and may withoutprejudice to his rights against the assignor demand assurancesfrom the assignee (section 2609).(June 8, 2001, P.L.123, No.18, eff. July 1, 2001)

2001 Amendment. Act 18 amended subsec. (b), reletteredsubsec. (c) to subsec. (d), subsec. (d) to subsec. (e) andsubsec. (e) to subsec. (f) and added a new subsec. (c).

CHAPTER 23GENERAL OBLIGATION AND CONSTRUCTION

OF CONTRACT

Sec.2301. General obligations of parties.2302. Unconscionable contract or clause.2303. Allocation or division of risks.2304. Price payable in money, goods, realty or otherwise.2305. Open price term.2306. Output, requirements and exclusive dealings.2307. Delivery in single lot or several lots.2308. Absence of specified place for delivery.2309. Absence of specific time provisions; notice of

term