Title 11, Chapter 1, Section 201
Subject to additional definitions contained in the subsequent
articles of this title which are applicable to specific articles or
parts thereof, and unless the context otherwise requires, in this
(1) "Action" in the sense of a judicial proceeding includes
recoupment, counterclaim, setoff, suit in equity, and any other
proceedings in which rights are determined.
(2) "Aggrieved party" means a party entitled to resort to a remedy.
(3) "Agreement" means the bargain of the parties 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 title (Code Sections 11-1-205 and 11-2-208). Whether an agreement has legal consequences is determined by the provisions of this title, if applicable; otherwise by the law of contracts (Code Section 11-1-103).
(4) "Bank" means any person engaged in the business of banking. Wherever the word "branch" is used in this title, with reference to a bank, it shall mean "branch office" as that term is defined in Code Section 7-1-600.
(5) "Bearer" means the person in possession of an instrument,
document of title, or certificated security payable to bearer or
indorsed in blank.
(6) "Bill of lading" means a document evidencing the receipt of
goods for shipment issued by a person engaged in the business of
transporting or forwarding goods, and includes an airbill. "Airbill"
means a document serving for air transportation as a bill of lading
does for marine or rail transportation, and includes an air
consignment note or air waybill.
(7) "Branch" includes a separately incorporated foreign branch of a
(8) "Burden of establishing" a fact means the burden of persuading
the triers of fact that the existence of the fact is more probable
than its nonexistence.
(9) "Buyer in ordinary course of business" means a person that 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 that
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 the
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 that takes possession of the goods or has a right to recover
the goods from the seller under Article 2 of this title may be a
buyer in ordinary course of business. A person that acquires goods
in a transfer in bulk or as security for or in total or partial
satisfaction of a money debt is not a buyer in ordinary course of
(10) "Conspicuous": A term or clause is conspicuous when it is so
written that a reasonable person against whom it is to operate ought
to have noticed it. A printed heading in capitals (as: Nonnegotiable
Bill of Lading) is conspicuous. Language in the body of a form is
"conspicuous" if it is in larger or other contrasting type or color.
But in a telegram any stated term is "conspicuous." Whether a term
or clause is "conspicuous" or not is for decision by the court.
(11) "Contract" means the total legal obligation which results from
the parties' agreement as affected by this title and any other
applicable rules of law.
(12) "Creditor" includes a general creditor, a secured creditor, a
lien creditor and any 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.
(13) "Defendant" includes a person in the position of defendant in a
cross-action or counterclaim.
(14) "Delivery" with respect to instruments, documents of title,
chattel paper, or certificated securities means voluntary transfer
(15) "Document of title" includes bill of lading, dock warrant, dock
receipt, warehouse receipt or order for the delivery of goods, and
also any other document which in the regular course of business or
financing is treated as adequately evidencing that the person in
possession of it is entitled to receive, hold, and dispose of the
document and the goods it covers. To be a document of title a
document must purport to be issued by or addressed to a bailee and
purport to cover goods in the bailee's possession which are either
identified or are fungible portions of an identified mass.
(16) "Fault" means wrongful act, omission, or breach.
(17) "Fungible" with respect to goods or securities means goods or
securities of which any unit is, by nature or usage of trade, the
equivalent of any other like unit. Goods which are not fungible
shall be deemed fungible for the purposes of this title to the
extent that under a particular agreement or document unlike units
are treated as equivalents.
(18) "Genuine" means free of forgery or counterfeiting.
(19) "Good faith" means honesty in fact in the conduct or
(20) "Holder," with respect to a negotiable instrument, means the
person in possession if the instrument is payable to bearer or, in
the case of an instrument payable to an identified person, if the
identified person is in possession. Holder with respect to a
document of title means the person in possession if the goods are
deliverable to bearer or to the order of the person in possession.
(21) To "honor" is to pay or to accept and pay, or where a credit so
engages to purchase or discount a draft complying with the terms of
(22) "Insolvency proceedings" includes any assignment for the
benefit of creditors or other proceedings intended to liquidate or
rehabilitate the estate of the person involved.
(23) A person is "insolvent" who either has ceased to pay his debts
in the ordinary course of business or cannot pay his debts as they
become due or is insolvent within the meaning of the federal
(24) "Money" means a medium of exchange 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 nations.
(25) A person has "notice" of a fact when:
(a) He has actual knowledge of it; or
(b) He has received a notice or notification of it; or
(c) From all the facts and circumstances known to him at the time
in question he has reason to know that it exists.
A person "knows" or has "knowledge" of a fact when he has actual
knowledge of it. "Discover" or "learn" or a word or phrase of
similar import refers to knowledge rather than to reason to know.
The time and circumstances under which a notice or notification may
cease to be effective are not determined by this title.
(26) A person "notifies" or "gives" a notice or notification to
another by taking such steps as may be reasonably required to inform
the other in ordinary course whether or not such other actually
comes to know of it. A person "receives" a notice or notification
(a) It comes to his attention; or
(b) It is duly delivered at the place of business through which
the contract was made or at any other place held out by him as the
place for receipt of such communications.
(27) Notice, knowledge, or a notice or notification received by an
organization is effective for a particular transaction from the time
when it is brought to the attention of the individual conducting
that transaction, and in any event from the time when it would have
been brought to his attention if the organization had exercised due
(28) "Organization" includes a corporation, government or
governmental subdivision or agency, business trust, estate, trust,
partnership or association, two or more persons having a joint or
common interest, or any other legal or commercial entity.
(29) "Party," as distinct from "third party," means a person who has engaged in a transaction or made an agreement within this title. (30) "Person" includes an individual or an organization (see Code Section 11-1-102).
(31) "Presumption" or "presumed" means that the trier of fact must
find the existence of the fact presumed unless and until evidence is
introduced which would support a finding of its nonexistence.
(31.1) "Public sale" means a sale:
(A) Held at a place reasonably available to persons who might
desire to attend and submit bids; and
(B) At which those attending shall be given the opportunity to bid
on a competitive basis; and
(C) At which the sale, if made, shall be made to the highest and
best bidder; and
(D) Except as otherwise provided in this title for advertising or
dispensing with the advertising of public sales, of which notice
is given by advertisement once a week for two weeks in the
newspaper in which the sheriff's advertisements are published in
the county where the sale is to be held, and which notice shall
state the day and hour, between 10:00 A.M. and 4:00 P.M., and the
place of sale and shall briefly identify the goods to be sold.
The provisions of this paragraph shall not be in derogation of any
additional requirements relating to notice of and conduct of any
such public sale as may be contained in other provisions of this
title but shall be supplementary thereto.
(32) "Purchase" includes taking by sale, discount, negotiation,
mortgage, pledge, lien, security interest, issue or reissue, gift,
or any other voluntary transaction creating an interest in property.
(33) "Purchaser" means a person who takes by purchase.
(34) "Remedy" means any remedial right to which an aggrieved party
is entitled with or without resort to a tribunal.
(35) "Representative" includes an agent, an officer of a corporation
or association, and a trustee, executor or administrator of an
estate, or any other person empowered to act for another.
(36) "Rights" includes remedies.
(37) "Security interest" means an interest in personal property or fixtures which secures payment or performance of an obligation. The term also includes any 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 Article 9 of this title. The special property interest of a buyer of goods on identification of those goods to a contract for sale under Code Section 11-2-401 is not a "security interest," but a buyer may also acquire a "security interest" by complying with Article 9 of this title. Except as otherwise provided in Code Section 11-2-505, the right of a seller or lessor of goods under Article 2 or 2A of this title 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 Article 9 of this title. The retention or reservation of title by a seller of goods notwithstanding shipment or delivery to the buyer (Code Section 11-2-401) is limited in effect to a reservation of a "security interest."
Whether a transaction creates a lease or security interest is
determined by the facts of each case; however, a transaction creates
a security interest if the consideration 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 not subject to termination by
the lessee, and
(a) The original term of the lease is equal to or greater than the
remaining economic life of the goods,
(b) The lessee is bound to renew the lease for the remaining
economic life of the goods or is bound to become the owner of the
(c) The lessee has an option to renew the lease for the remaining
economic life of the goods for no additional consideration or
nominal additional consideration upon compliance with the lease
(d) The lessee has an option to become the owner of the goods for
no additional consideration or nominal additional consideration
upon compliance with the lease agreement.
A transaction does not create a security interest merely because it
(a) The 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 is greater than the fair market value
of the goods at the time the lease is entered into,
(b) The lessee assumes risk of loss of the goods, or agrees to pay
taxes, insurance, filing, recording, or registration fees, or
service or maintenance costs with respect to the goods,
(c) The lessee has an option to renew the lease or to become the
owner of the goods,
(d) The 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
(e) The 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.
For purposes of this subsection (37):
(x) Additional consideration is not nominal if (i) when the option
to 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 (ii) when the option to 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. 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;
(y) "Reasonably predictable" and "remaining economic life of the
goods" are to be determined with reference to the facts and
circumstances at the time the transaction is entered into; and
(z) "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 is not manifestly
unreasonable at the time the transaction is 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.
(38) "Send" in connection with any writing or notice means to
deposit in the mail or deliver for transmission by any other 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 thereon or otherwise agreed, or if there be none
to any address reasonable under the circumstances. The receipt of
any writing or notice within the time at which it would have arrived
if properly sent has the effect of a proper sending.
(39) "Signed" includes any symbol executed or adopted by a party
with present intention to authenticate a writing.
(40) "Surety" includes guarantor.
(41) "Telegram" includes a message transmitted by radio, teletype,
cable, any mechanical method of transmission, or the like.
(42) "Term" means that portion of an agreement which relates to a
(43) "Unauthorized" signature means one made without actual,
implied, or apparent authority and includes a forgery.
(44) "Value": Except as otherwise provided with respect to negotiable instruments and bank collections (Code Sections 11-3-303, 11-4-208, and 11-4-209) a person gives "value" for rights if he acquires them:
(a) 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; or
(b) As security for or in total or partial satisfaction of a
preexisting claim; or
(c) By accepting delivery pursuant to a preexisting contract for
(d) Generally, in return for any consideration sufficient to
support a simple contract.
(45) "Warehouse receipt" means a receipt issued by a person engaged
in the business of storing goods for hire.
(46) "Written" or "writing" includes printing, typewriting, or any
other intentional reduction to tangible form.