Senate File 2389 - Reprinted SENATE FILE 2389 BY COMMITTEE ON JUDICIARY (SUCCESSOR TO SF 540) (SUCCESSOR TO SSB 1177) (COMPANION TO HF 2519 BY COMMITTEE ON JUDICIARY) (As Amended and Passed by the Senate February 21, 2024 ) A BILL FOR An Act relating to commercial transactions, including control 1 and transmission of electronic records and digital assets. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 SF 2389 (5) 90 da/jh/mb

S.F. 2389 DIVISION I 1 UNIFORM COMMERCIAL CODE 2 PART A 3 ARTICLE 14 4 CONTROLLABLE ELECTRONIC RECORDS 5 Section 1. Section 554.14101, Code 2024, is amended to read 6 as follows: 7 554.14101 Short title. 8 This Article may be cited as the Uniform Commercial Code —— 9 Controllable Electronic Records. 10 Sec. 2. Section 554.14102, Code 2024, is amended to read as 11 follows: 12 554.14102 Definitions. 13 1. Article 14 definitions. Article 14 definitions. In this 14 Article : 15 a. “Controllable electronic record” means a record stored 16 in an electronic medium that can be subjected to control under 17 section 554.14105 . The term does not include a controllable 18 account, a controllable payment intangible, a deposit account, 19 electronic chattel paper, an electronic copy of a record 20 evidencing chattel paper, an electronic document of title, 21 electronic money, investment property, or a transferable 22 record. 23 b. “Qualifying purchaser” means a purchaser of a 24 controllable electronic record or an interest in the a 25 controllable electronic record that obtains control of the 26 controllable electronic record for value, in good faith, 27 and without notice of a claim of a property right in the 28 controllable electronic record. 29 c. “Transferable record” means has the meaning provided for 30 that term in : 31 (1) “Transferable record” , as defined in the federal Section 32 201(a)(1) of the Electronic Signatures in Global and National 33 Commerce Act, 15 U.S.C. §7021(a)(1), as amended . ; or 34 (2) “Transferable record” as defined in the uniform 35 -1- SF 2389 (5) 90 da/jh/mb 1/ 84

S.F. 2389 electronic transactions Uniform Electronic Transactions Act, 1 section 554D.118, subsection 1 . 2 d. “Value” has the meaning provided in section 554.3303, 3 subsection 1 , as if references in that subsection to an 4 “instrument” were references to a controllable account, 5 controllable electronic record, or controllable payment 6 intangible . 7 2. Definitions in Article 9 . Definitions in Article 9 . The 8 definitions in Article 9 of “account debtor” , “authenticate” , 9 “controllable account” , “controllable payment intangible” , 10 “chattel paper” , “deposit account” , “electronic chattel paper” , 11 “electronic money” , and “investment property” apply to this 12 Article . 13 3. Article 1 definitions and principles. Article 1 contains 14 general definitions and principles of construction and 15 interpretation applicable throughout this Article. 16 Sec. 3. Section 554.14103, Code 2024, is amended to read as 17 follows: 18 554.14103 Scope Relation to Article 9 and consumer laws . 19 1. Article 9 governs in case of conflict. If there is 20 conflict between this Article and Article 9 , Article 9 governs. 21 2. Applicable consumer law and other laws. A transaction 22 subject to this Article is subject to: 23 a. any applicable rule of law that establishes a different 24 rule for consumers, including as provided in chapter 537 and 25 any other consumer protection statute or regulation of this 26 state; and 27 b. any other statute or regulation of this state that 28 regulates the rates, charges, agreements, and practices for 29 loans, credit sales, or other extensions of credit or credit 30 transactions, including as provided in chapter 535 . 31 2A. National digital currency not supported, endorsed, 32 created, or implemented. This Article shall not be construed 33 to support, endorse, create, or implement a national digital 34 currency. 35 -2- SF 2389 (5) 90 da/jh/mb 2/ 84

S.F. 2389 Sec. 4. Section 554.14104, Code 2024, is amended to read as 1 follows: 2 554.14104 Rights in controllable account, controllable 3 electronic record, and controllable payment intangible. 4 1. Applicability of section to controllable account and 5 controllable payment intangible. This section applies to the 6 acquisition and purchase of rights in a controllable account 7 or controllable payment intangible, including the rights and 8 benefits under subsections 3, 4, 5, 7, and 8 of a purchaser 9 and a qualifying purchaser , and under subsections 3, 4, and 6 , 10 and in the same manner this section applies to a controllable 11 electronic record. 12 2. Control of controllable account and controllable payment 13 intangible. To determine whether a purchaser of a controllable 14 account or a controllable payment intangible is a qualifying 15 purchaser, the purchaser obtains control of the account or 16 payment intangible if it obtains control of the controllable 17 electronic record that evidences the account or payment 18 intangible. 19 2. 3. Applicability of other law to acquisition of 20 rights. Except as provided in this section , law other than 21 this Article determines whether a person acquires a right in 22 a controllable electronic record and the right the person 23 acquires. 24 3. 4. Shelter principle and purchase of limited interest. A 25 purchaser of a controllable electronic record acquires 26 all rights in the controllable electronic record that the 27 transferor had or had power to transfer, except that a 28 purchaser of a limited interest in a controllable electronic 29 record acquires rights only to the extent of the interest 30 purchased. 31 4. 5. Rights of qualifying purchaser. A qualifying 32 purchaser acquires its rights in the controllable electronic 33 record free of a claim of a property right in the controllable 34 electronic record. 35 -3- SF 2389 (5) 90 da/jh/mb 3/ 84

S.F. 2389 5. 6. Limitation of rights of qualifying purchaser in 1 other property. Except as provided in subsections 1 and 4 2 5 for a controllable accounts account and a controllable 3 payment intangibles intangible or law other than this Article , 4 a qualifying purchaser takes a right to payment, right to 5 performance, or other interest in property evidenced by the 6 controllable electronic record subject to a claim of a property 7 right in the right to payment, right to performance, or other 8 interest in property. 9 6. 7. No-action protection for qualifying purchaser. An 10 action shall not be asserted against a qualifying purchaser 11 based on both a purchase by the qualifying purchaser of a 12 controllable electronic record and a claim of a property 13 right in another controllable electronic record, whether the 14 action is framed in conversion, replevin, constructive trust, 15 equitable lien, or other theory. 16 7. 8. Filing not notice. Filing of a financing statement 17 under Article 9 is not notice of a claim of a property right in 18 a controllable electronic record. 19 Sec. 5. Section 554.14105, Code 2024, is amended to read as 20 follows: 21 554.14105 Control of controllable electronic record. 22 1. General rule : —— control of controllable electronic 23 record. A person has control of a controllable electronic 24 record if the electronic record, a record attached to or 25 logically associated with the electronic record, or a system in 26 which the electronic record is recorded : 27 a. the electronic record, a record attached to or logically 28 associated with the electronic record, or a system in which the 29 electronic record is recorded gives the person: 30 (1) the power to avail itself of substantially all the 31 benefit from the electronic record; and 32 (2) exclusive power, subject to subsection 2 , to: 33 (a) prevent others from availing themselves of 34 substantially all the benefit from the electronic record; and 35 -4- SF 2389 (5) 90 da/jh/mb 4/ 84

S.F. 2389 (b) transfer control of the electronic record to another 1 person or cause another person to obtain control of another 2 controllable electronic record as a result of the transfer of 3 the electronic record; and 4 b. the electronic record, a record attached to or logically 5 associated with the electronic record, or a system in which 6 the electronic record is recorded enables the person readily 7 to identify itself in any way, including by name, identifying 8 number, cryptographic key, office, or account number, as having 9 the powers specified in paragraph “a” . 10 2. Control through another person. A person has control of 11 a controllable electronic record if another person, other than 12 the transferor of an interest in the electronic record: 13 a. has control of the electronic record and acknowledges 14 that it has control on behalf of the person, or 15 b. obtains control of the electronic record after having 16 acknowledged that it will obtain control of the electronic 17 record on behalf of the person. 18 3. 2. Meaning of exclusive. A power specified in Subject 19 to subsection 1 3 , paragraph “a” , subparagraph (2), a power is 20 exclusive , under subsection 1, paragraph “a” , subparagraph (2), 21 subparagraph divisions (a) and (b) even if: 22 a. the controllable electronic record , a record attached 23 to or logically associated with the electronic record, or a 24 system in which the electronic record is recorded limits the 25 use of the electronic record or has a protocol programmed to 26 cause a change, including a transfer or loss of control or a 27 modification of benefits afforded by the electronic record; or 28 b. the person has agreed to share the power is shared with 29 another person. 30 3. When power not shared with another person. A power of a 31 person is not shared with another person under subsection 2, 32 paragraph “b” and the person’s power is not exclusive if: 33 a. the person can exercise the power only if the power also 34 is exercised by the other person; and 35 -5- SF 2389 (5) 90 da/jh/mb 5/ 84

S.F. 2389 b. the other person: 1 (1) can exercise the power without exercise of the power by 2 the person; or 3 (2) is the transferor to the person of an interest in the 4 controllable electronic record or a controllable account or 5 controllable payment intangible evidenced by the controllable 6 electronic record. 7 4. Presumption of exclusivity of certain powers. If a 8 person has the powers specified in subsection 1, paragraph “a” , 9 subparagraph (2), subparagraph divisions (a) and (b) the powers 10 are presumed to be exclusive. 11 5. Control through another person. A person has control of 12 a controllable electronic record if another person, other than 13 the transferor to the person of an interest in the controllable 14 electronic record or a controllable account or controllable 15 payment intangible evidenced by the controllable electronic 16 record: 17 a. has control of the electronic record and acknowledges 18 that it has control on behalf of the person; or 19 b. obtains control of the electronic record after having 20 acknowledged that it will obtain control of the electronic 21 record on behalf of the person. 22 6. No requirement to acknowledge. A person that has control 23 under this section is not required to acknowledge that it has 24 control on behalf of another person. 25 7. No duties or confirmation. If a person acknowledges that 26 it has or will obtain control on behalf of another person, 27 unless the person otherwise agrees or law other than this 28 Article or Article 9 otherwise provides, the person does not 29 owe any duty to the other person and is not required to confirm 30 the acknowledgment to any other person. 31 Sec. 6. Section 554.14106, Code 2024, is amended to read as 32 follows: 33 554.14106 Discharge of account debtor on controllable account 34 or controllable payment intangible. 35 -6- SF 2389 (5) 90 da/jh/mb 6/ 84

S.F. 2389 1. Discharge of account debtor. An account debtor on a 1 controllable account or controllable payment intangible may 2 discharge its obligation by paying: 3 a. the person having control of the controllable electronic 4 record that evidences the controllable account or controllable 5 payment intangible; or 6 b. except as provided in subsection 2 , a person that 7 formerly had control of the controllable electronic record. 8 2. Effect Content and effect of notification. Subject to 9 subsection 4 , an the account debtor shall not discharge its 10 obligation by paying a person that formerly had control of the 11 controllable electronic record if the account debtor receives a 12 notification that: 13 a. is authenticated signed by a person that formerly had 14 control or the person to which control was transferred; 15 b. reasonably identifies the controllable account or 16 controllable payment intangible; 17 c. notifies the account debtor that control of the 18 controllable electronic record that evidences the controllable 19 account or controllable payment intangible was transferred; 20 d. identifies the transferee, in any reasonable way, 21 including by name, identifying number, cryptographic key, 22 office, or account number; and 23 e. provides a commercially reasonable method by which the 24 account debtor is to pay the transferee. 25 3. Discharge following effective notification. After 26 receipt of a notification that complies with subsection 2 , the 27 account debtor may discharge its obligation only by paying in 28 accordance with the notification and shall not discharge the 29 obligation by paying a person that formerly had control. 30 4. When notification ineffective. Notification Subject to 31 subsection 8, notification is ineffective under subsection 2 : 32 a. unless, before the notification is sent, an the account 33 debtor and the person that, at that time, had control of the 34 controllable electronic record that evidences the controllable 35 -7- SF 2389 (5) 90 da/jh/mb 7/ 84

S.F. 2389 account or controllable payment intangible agree in an 1 authenticated a signed record to a commercially reasonable 2 method by which a person must furnish reasonable proof that 3 control has been transferred; 4 b. to the extent an agreement between an the account debtor 5 and seller of a payment intangible limits the account debtor’s 6 duty to pay a person other than the seller and the limitation 7 is effective under law other than this Article ; or 8 c. at the option of an the account debtor, if the 9 notification notifies the account debtor to: 10 (1) divide a payment; 11 (2) make less than the full amount of any an installment or 12 other periodic payment; or 13 (3) pay any part of a payment by more than one method or to 14 more than one person. 15 5. Proof of transfer of control. If Subject to subsection 16 8, if requested by the account debtor, the person giving the 17 notification under subsection 2 seasonably shall furnish 18 reasonable proof, using the agreed method in the agreement 19 referred to in subsection 4, paragraph “a” , that control of the 20 controllable electronic record has been transferred. Unless 21 the person complies with the request, the account debtor may 22 discharge its obligation by paying a person that formerly had 23 control, even if the account debtor has received a notification 24 under subsection 2 . 25 6. What constitutes reasonable proof. A person furnishes 26 reasonable proof under subsection 5 that control has been 27 transferred if the person demonstrates, using the agreed method 28 in the agreement referred to in subsection 4, paragraph “a” , 29 that the transferee has the power to: 30 a. avail itself of substantially all the benefit from the 31 controllable electronic record; 32 b. prevent others from availing themselves of substantially 33 all the benefit from the controllable electronic record; and 34 c. transfer the powers mentioned specified in paragraphs “a” 35 -8- SF 2389 (5) 90 da/jh/mb 8/ 84

S.F. 2389 and “b” to another person. 1 7. Rights not waivable. An Subject to subsection 8, 2 an account debtor shall not waive or vary its rights under 3 subsection 4 , paragraph “a” , and subsection 5 or its option 4 under subsection 4 , paragraph “c” . 5 8. Rule for individual under other law. This section is 6 subject to law other than this Article which establishes a 7 different rule for an account debtor who is an individual and 8 who incurred the obligation primarily for personal, family, or 9 household purposes. 10 Sec. 7. Section 554.14107, Code 2024, is amended by striking 11 the section and inserting in lieu thereof the following: 12 554.14107 Governing law. 13 1. Governing law: general rule. Except as provided in 14 subsection 2, the local law of a controllable electronic 15 record’s jurisdiction governs a matter covered by this Article. 16 2. Governing law: section 554.14106. For a controllable 17 electronic record that evidences a controllable account 18 or controllable payment intangible, the local law of the 19 controllable electronic record’s jurisdiction governs a matter 20 covered by section 554.14106 unless an effective agreement 21 determines that the local law of another jurisdiction governs. 22 3. Controllable electronic record’s jurisdiction. The 23 following rules determine a controllable electronic record’s 24 jurisdiction under this section: 25 a. if the controllable electronic record, or a record 26 attached to or logically associated with the controllable 27 electronic record and readily available for review, expressly 28 provides that a particular jurisdiction is the controllable 29 electronic record’s jurisdiction for purposes of this section, 30 Article, or chapter, that jurisdiction is the controllable 31 electronic record’s jurisdiction. 32 b. if paragraph “a” does not apply and the rules of the 33 system in which the controllable electronic record is recorded 34 are readily available for review and expressly provide that a 35 -9- SF 2389 (5) 90 da/jh/mb 9/ 84

S.F. 2389 particular jurisdiction is the controllable electronic record’s 1 jurisdiction for purposes of this section, Article, or chapter, 2 that jurisdiction is the controllable electronic record’s 3 jurisdiction. 4 c. if paragraphs “a” and “b” do not apply and the 5 controllable electronic record, or a record attached to or 6 logically associated with the controllable electronic record 7 and readily available for review, expressly provides that the 8 controllable electronic record is governed by the law of a 9 particular jurisdiction, that jurisdiction is the controllable 10 electronic record’s jurisdiction. 11 d. if paragraphs “a” , “b” , and “c” do not apply and the 12 rules of the system in which the controllable electronic 13 record is recorded are readily available for review and 14 expressly provide that the controllable electronic record or 15 the system is governed by the law of a particular jurisdiction, 16 that jurisdiction is the controllable electronic record’s 17 jurisdiction. 18 e. if paragraphs “a” through “d” do not apply, the 19 controllable electronic record’s jurisdiction is the District 20 of Columbia. 21 4. Applicability of Article 12. If subsection 3, paragraph 22 “e” , applies and Article 12 is not in effect in the District of 23 Columbia without material modification, the governing law for 24 a matter covered by this Article is the law of the District of 25 Columbia as though Article 12 were in effect in the District of 26 Columbia without material modification. In this subsection, 27 “Article 12” means Article 12 of Uniform Commercial Code 28 Amendments (2022) approved by the uniform law commission at its 29 annual meeting in July 2022. 30 5. Relation of matter or transaction to controllable 31 electronic record’s jurisdiction not necessary. To the 32 extent subsections 1 and 2 provide that the local law of the 33 controllable electronic record’s jurisdiction governs a matter 34 covered by this Article, that law governs even if the matter 35 -10- SF 2389 (5) 90 da/jh/mb 10/ 84

S.F. 2389 or a transaction to which the matter relates does not bear any 1 relation to the controllable electronic record’s jurisdiction. 2 6. Rights of purchasers determined at time of purchase. The 3 rights acquired under section 554.14104 by a purchaser or 4 qualifying purchaser are governed by the law applicable under 5 this section at the time of purchase. 6 Sec. 8. Section 554.14108, Code 2024, is amended to read as 7 follows: 8 554.14108 Applicability. 9 1. This Article applies to any transaction involving a 10 controllable electronic record that arises on or after July 1, 11 2022. This Article does not apply to any transaction involving 12 a controllable electronic record that arises before July 1, 13 2022, even if the transaction would be subject to this Article 14 if the transaction had arisen on or after July 1, 2022. This 15 Article does not apply to a right of action with regard to any 16 transaction involving a controllable electronic record that has 17 accrued before July 1, 2022. 18 2. This section is repealed on July 1, 2025. 19 Sec. 9. Section 554.14109, Code 2024, is amended to read as 20 follows: 21 554.14109 Savings clause. 22 1. Any transaction involving a controllable electronic 23 record that arose before July 1, 2022, and the rights, 24 obligations, and interests flowing from that transaction are 25 governed by any statute or other rule amended or repealed by 26 this Article as if such amendment or repeal had not occurred 27 and may be terminated, completed, consummated, or enforced 28 under that statute or other rule. 29 2. This section is repealed on July 1, 2025. 30 PART B 31 ARTICLE 1 32 GENERAL PROVISIONS 33 Sec. 10. Section 554.1201, subsection 2, Code 2024, is 34 amended by adding the following new paragraph: 35 -11- SF 2389 (5) 90 da/jh/mb 11/ 84

S.F. 2389 NEW PARAGRAPH . 0j. “Central bank digital currency” means a 1 digital currency, a digital medium of exchange, or a digital 2 monetary unit of account issued by the United States federal 3 reserve system, a federal agency, a foreign government, a 4 foreign central bank, or a foreign reserve system, that is made 5 directly available to a consumer by such entities. The term 6 includes a digital currency, a digital medium of exchange, or a 7 digital monetary unit of account issued by the United States 8 federal reserve system, a federal agency, a foreign government, 9 a foreign central bank, or a foreign reserve system, that is 10 processed or validated directly by such entities. 11 Sec. 11. Section 554.1201, subsection 2, paragraphs j, o, v, 12 y, ab, ak, and al, Code 2024, are amended to read as follows: 13 j. “Conspicuous” , with reference to a term, means so 14 written, displayed, or presented that , based on the totality 15 of the circumstances, a reasonable person against which it 16 is to operate ought to have noticed it. Whether a term is 17 “conspicuous” or not is a decision for the court. Conspicuous 18 terms include the following: 19 (1) a heading in capitals equal to or greater in size than 20 the surrounding text, or in contrasting type, font, or color to 21 the surrounding text of the same or lesser size; and 22 (2) language in the body of a record or display in larger 23 type than the surrounding text, or in contrasting type, font, 24 or color to the surrounding text of the same size, or set off 25 from surrounding text of the same size by symbols or other 26 marks that call attention to the language. 27 o. “Delivery” , with respect to an electronic document 28 of title , means voluntary transfer of control and , with 29 respect to an instrument, a tangible document of title, or an 30 authoritative tangible copy of a record evidencing chattel 31 paper, means voluntary transfer of possession. 32 v. “Holder” means: 33 (1) the person in possession of a negotiable instrument that 34 is payable either to bearer or to an identified person that is 35 -12- SF 2389 (5) 90 da/jh/mb 12/ 84

S.F. 2389 the person in possession; 1 (2) the person in possession of a negotiable tangible 2 document of title if the goods are deliverable either to bearer 3 or to the order of the person in possession; or 4 (3) the person in control , other than pursuant to section 5 554.7106, subsection 7, of a negotiable electronic document of 6 title. 7 y. “Money” means a medium of exchange that : is currently 8 authorized or adopted by a domestic or foreign government. The 9 term includes a monetary unit of account established by an 10 intergovernmental organization, or pursuant to an agreement 11 between two or more countries. The term does not include an 12 electronic record that is a medium of exchange recorded and 13 transferable in a system that existed and operated for the 14 medium of exchange before the medium of exchange was authorized 15 or adopted by the government. The term also does not include a 16 central bank digital currency. 17 (1) is currently authorized or adopted by a domestic or 18 foreign government, by an intergovernmental organization, or 19 pursuant to an agreement between two or more governments; and 20 (2) was initially issued, created, or distributed by 21 a domestic or foreign government, by an intergovernmental 22 organization, or pursuant to an agreement between two or more 23 governments. 24 ab. “Person” means an individual, corporation, business 25 trust, estate, trust, partnership, limited liability company, 26 association, joint venture, government, governmental 27 subdivision, agency, or instrumentality, public corporation, 28 or any other legal or commercial entity. The term includes 29 a protected series, however denominated, of an entity if the 30 protected series is established under law other than this 31 chapter that limits, or limits if conditions specified under 32 the law are satisfied, the ability of a creditor of the entity 33 or of any other protected series of the entity to satisfy a 34 claim from assets of the protected series. 35 -13- SF 2389 (5) 90 da/jh/mb 13/ 84

S.F. 2389 ak. “Send” in connection with a writing, record , or notice 1 notification means: 2 (1) to deposit in the mail , or deliver for transmission , 3 or transmit by any other usual means of communication , with 4 postage or cost of transmission provided for , and properly 5 addressed and, in the case of an instrument, to an address 6 specified thereon or otherwise agreed, or if there be none to 7 any address reasonable under the circumstances; or 8 (2) in any other way to cause to be received any the record 9 or notice notification to be received within the time it would 10 have arrived been received if properly sent under subparagraph 11 (1) . 12 al. (1) “Signed” includes using any symbol executed 13 or adopted “Sign” means, with present intention intent to 14 authenticate or adopt or accept a writing. record: 15 (a) to execute or adopt a tangible symbol; or 16 (b) to attach to or logically associate with the record an 17 electronic symbol, sound, or process. 18 (2) “Signed” , “signing” , and “signature” have corresponding 19 meanings. 20 Sec. 12. Section 554.1301, subsection 3, paragraph g, Code 21 2024, is amended to read as follows: 22 g. Sections 554.13105 and 554.13106 . ; 23 Sec. 13. Section 554.1301, subsection 3, Code 2024, is 24 amended by adding the following new paragraph: 25 NEW PARAGRAPH . h. Section 554.14107. 26 Sec. 14. Section 554.1306, Code 2024, is amended to read as 27 follows: 28 554.1306 Waiver or renunciation of claim or right after 29 breach. 30 A claim or right arising out of an alleged breach may 31 be discharged in whole or in part without consideration by 32 agreement of the aggrieved party in an authenticated a signed 33 record. 34 PART C 35 -14- SF 2389 (5) 90 da/jh/mb 14/ 84

S.F. 2389 ARTICLE 2 1 SALES 2 Sec. 15. Section 554.2102, Code 2024, is amended to read as 3 follows: 4 554.2102 Scope —— certain security and other transactions 5 excluded from this Article . 6 1. Unless the context otherwise requires, this Article 7 applies to transactions in goods; it does not apply to any 8 transaction which although in the form of an unconditional 9 contract to sell or present sale is intended to operate only 10 as a security transaction nor does this Article impair or 11 repeal any statute regulating sales to consumers, farmers or 12 other specified classes of buyers and except as provided in 13 subsection 3, this Article applies to transactions in goods 14 and, in the case of a hybrid transaction, it applies to the 15 extent provided in subsection 2 . 16 2. In a hybrid transaction: 17 a. if the sale-of-qoods aspects do not predominate, only 18 the provisions of this Article which relate primarily to 19 the sale-of-goods aspects of the transaction apply, and the 20 provisions that relate primarily to the transaction as a whole 21 do not apply. 22 b. if the sale-of-goods aspects predominate, this Article 23 applies to the transaction but does not preclude application 24 in appropriate circumstances of other law to aspects of the 25 transaction which do not relate to the sale of goods. 26 3. This Article does not: 27 a. apply to a transaction that, even though in the form of 28 an unconditional contract to sell or present sale, operates 29 only to create a security interest; or 30 b. impair or repeal a statute regulating sales to consumers, 31 farmers, or other specified classes of buyers. 32 Sec. 16. Section 554.2106, Code 2024, is amended to read as 33 follows: 34 554.2106 Definitions: “contract” —— “agreement” —— “contract 35 -15- SF 2389 (5) 90 da/jh/mb 15/ 84

S.F. 2389 for sale” —— “sale” —— “present sale” —— “conforming” to contract 1 —— “termination” —— “cancellation” —— “hybrid transaction” . 2 1. In this Article unless the context otherwise requires 3 “contract” and “agreement” are limited to those relating to the 4 present or future sale of goods. “Contract for sale” includes 5 both a present sale of goods and a contract to sell goods at a 6 future time. A “sale” consists in the passing of title from the 7 seller to the buyer for a price ( section 554.2401 ). A “present 8 sale” means a sale which is accomplished by the making of the 9 contract. 10 2. Goods or conduct including any part of a performance 11 are “conforming” or conform to the contract when they are in 12 accordance with the obligations under the contract. 13 3. “Termination” occurs when either party pursuant to 14 a power created by agreement or law puts an end to the 15 contract otherwise than for its breach. On “termination” 16 all obligations which are still executory on both sides are 17 discharged but any right based on prior breach or performance 18 survives. 19 4. “Cancellation” occurs when either party puts an end to 20 the contract for breach by the other and its effect is the same 21 as that of “termination” except that the canceling party also 22 retains any remedy for breach of the whole contract or any 23 unperformed balance. 24 5. “Hybrid transaction” means a single transaction involving 25 a sale of goods and: 26 a. the provision of services; 27 b. a lease of other goods; or 28 c. a sale, lease, or license of property other than goods. 29 Sec. 17. Section 554.2201, subsections 1 and 2, Code 2024, 30 are amended to read as follows: 31 1. Except as otherwise provided in this section a contract 32 for the sale of goods for the price of five hundred dollars 33 or more is not enforceable by way of action or defense unless 34 there is some writing a record sufficient to indicate that a 35 -16- SF 2389 (5) 90 da/jh/mb 16/ 84

S.F. 2389 contract for sale has been made between the parties and signed 1 by the party against whom enforcement is sought or by that the 2 party’s authorized agent or broker. A writing record is not 3 insufficient because it omits or incorrectly states a term 4 agreed upon but the contract is not enforceable under this 5 paragraph subsection beyond the quantity of goods shown in such 6 writing the record . 7 2. Between merchants if within a reasonable time a writing 8 record in confirmation of the contract and sufficient against 9 the sender is received and the party receiving it has reason to 10 know its contents, it satisfies the requirements of subsection 11 1 against such the party unless written notice in a record of 12 objection to its contents is given within ten days after it is 13 received. 14 Sec. 18. Section 554.2202, Code 2024, is amended to read as 15 follows: 16 554.2202 Final written expression —— parol or extrinsic 17 evidence. 18 Terms with respect to which the confirmatory memoranda of 19 the parties agree or which are otherwise set forth in a writing 20 record intended by the parties as a final expression of their 21 agreement with respect to such terms as are included therein 22 may not be contradicted by evidence of any prior agreement or 23 of a contemporaneous oral agreement but may be explained or 24 supplemented : 25 1. by course of performance, course of dealing, or usage of 26 trade ( section 554.1303 ); and 27 2. by evidence of consistent additional terms unless the 28 court finds the writing record to have been intended also as a 29 complete and exclusive statement of the terms of the agreement. 30 Sec. 19. Section 554.2203, Code 2024, is amended to read as 31 follows: 32 554.2203 Seals inoperative. 33 The affixing of a seal to a writing record evidencing a 34 contract for sale or an offer to buy or sell goods does not 35 -17- SF 2389 (5) 90 da/jh/mb 17/ 84

S.F. 2389 constitute the writing record a sealed instrument and the law 1 with respect to sealed instruments does not apply to such a 2 contract or offer. 3 Sec. 20. Section 554.2205, Code 2024, is amended to read as 4 follows: 5 554.2205 Firm offers. 6 An offer by a merchant to buy or sell goods in a signed 7 writing record which by its terms gives assurance that it will 8 be held open is not revocable, for lack of consideration, 9 during the time stated or if no time is stated for a reasonable 10 time, but in no event may such period of irrevocability exceed 11 three months; but any such term of assurance on a form supplied 12 by the offeree must be separately signed by the offeror. 13 Sec. 21. Section 554.2209, subsection 2, Code 2024, is 14 amended to read as follows: 15 2. A signed agreement which excludes modification or 16 rescission except by a signed writing or other signed record 17 cannot be otherwise modified or rescinded, but except as 18 between merchants such a requirement on a form supplied by the 19 merchant must be separately signed by the other party. 20 PART D 21 ARTICLE 3 22 NEGOTIABLE INSTRUMENTS 23 Sec. 22. Section 554.3104, subsection 1, paragraph c, Code 24 2024, is amended to read as follows: 25 c. does not state any other undertaking or instruction 26 by the person promising or ordering payment to do any act in 27 addition to the payment of money, but the promise or order 28 may contain an undertaking or power to give, maintain, or 29 protect collateral to secure payment, an authorization or 30 power to the holder to confess judgment or realize on or 31 dispose of collateral, or a waiver of the benefit of any law 32 intended for the advantage or protection of an obligor , a term 33 that specifies the law that governs the promise or order, 34 or an undertaking to resolve in a specified forum a dispute 35 -18- SF 2389 (5) 90 da/jh/mb 18/ 84