CHAPTER 1. GENERAL PROVISIONS
PART 1. GENERAL PROVISIONS
§1-101. Short titles
(a) This Title may be cited as the Uniform Commercial Code.
(b) This Chapter may be cited as Uniform Commercial Code--General Provisions.
Added by Acts 1974, No. 92, §1, eff. Jan. 1, 1975; Acts 2006, No. 533, §1.
§1-102. Scope of Chapter
This Chapter applies to a transaction to the extent that it is governed by another Chapter of this Title.
Added by Acts 1974, No. 92, §1, eff. Jan. 1, 1975 ; Acts 2006, No. 533, §1.
§1-103. Construction of Uniform Commercial Code to promote its purposes and policies; applicability of supplemental principles of law
(a) This Title shall be liberally construed and applied to promote its underlying purposes and policies, which are:
(1) to simplify, clarify, and modernize the law governing commercial transactions;
(2) to permit the continued expansion of commercial practices through custom, usage, and agreement of the parties; and
(3) to promote uniformity of the law among the various jurisdictions.
(b) Unless displaced by the particular provisions of this Title, the other laws of Louisiana supplement its provisions.
Added by Acts 1974, No. 92, §1, eff. Jan. 1, 1975 ; Acts 2006, No. 533, §1.
§1-104. Construction against implied repeal
This Title being a general law intended as a unified coverage of its subject matter, no part of it shall be deemed to be impliedly repealed by subsequent legislation if such construction can reasonably be avoided.
Added by Acts 1974, No. 92, §1, eff. Jan. 1, 1975; Acts 2006, No. 533, §1.
§1-105. [Reserved.]
§1-106. [Reserved.]
§1-107. [Reserved.]
§1-108. Relation to Electronic Signatures in Global and National Commerce Act
This Chapter modifies, limits, and supersedes the federal Electronic Signatures in Global and National Commerce Act, 15 U.S.C. Section 7001 et seq., except that nothing in this Chapter modifies, limits, or supersedes Section 7001(c) of that Act or authorizes electronic delivery of any of the notices described in Section 7003(b) of that Act.
Acts 2006, No. 533, §1.
PART 2. GENERAL DEFINITIONS AND PRINCIPLES
§1-202. Notice; knowledge
(a) Subject to Subsection (f), a person has "notice" of a fact if the person:
(1) has actual knowledge of it;
(2) has received a notice or notification of it; or
(3) from all the facts and circumstances known to the person at the time in question, has reason to know that it exists.
(b) "Knowledge" means actual knowledge. "Knows" has a corresponding meaning.
(c) "Discover," "learn," or words of similar import refer to knowledge rather than to reason to know.
(d) A person "notifies" or "gives" a notice or notification to another person by taking such steps as may be reasonably required to inform the other person in ordinary course, whether or not the other person actually comes to know of it.
(e) 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 the place of business through which the contract was made or at another location held out by that person as the place for receipt of such communications.
(f) Notice, knowledge, or a notice or notification received by an organization is effective for a particular transaction from the time it is brought to the attention of the individual conducting that transaction and, in any event, from the time it would have been brought to the individual's attention if the organization had exercised due diligence. An organization exercises due diligence if it maintains reasonable routines for communicating significant information to the person conducting the transaction and there is reasonable compliance with the routines. Due diligence does not require an individual acting for the organization to communicate information unless the communication is part of the individual's regular duties or the individual has reason to know of the transaction and that the transaction would be materially affected by the information.
Added by Acts 1974, No. 92, §1, eff. Jan. 1, 1975 ; Acts 2006, No. 533, §1.
§1-203. Lease distinguished from security interest
(a) Whether a transaction in the form of a lease creates a lease or security interest is determined by the facts of each case.
(b) A transaction in the form of a lease creates a security interest if the consideration that the lessee is to pay the lessor for the right to possession and use of the goods is an obligation for the term of the lease and is not subject to termination by the lessee, and:
(1) the original term of the lease is equal to or greater than the remaining economic life of the goods;
(2) 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 goods;
(3) the lessee has an option to renew the lease for the remaining economic life of the goods for no additional consideration or for nominal additional consideration upon compliance with the lease; or
(4) the lessee has an option to become the owner of the goods for no additional consideration or for nominal additional consideration upon compliance with the lease.
(c) A transaction in the form of a lease does not create a security interest merely because:
(1) 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;
(2) the lessee assumes risk of loss of the goods;
(3) the lessee agrees to pay, with respect to the goods, taxes, insurance, filing, recording, or registration fees, or service or maintenance costs;
(4) the lessee has an option to renew the lease or to become the owner of the goods;
(5) 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
(6) 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.
(d) Additional consideration is nominal if it is less than the lessee's reasonably predictable cost of performing under the lease if the option is not exercised. Additional consideration is not nominal if:
(1) 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
(2) 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.
(e) The "remaining economic life of the goods" and "reasonably predictable" fair market rent, fair market value, or cost of performing under the lease must be determined with reference to the facts and circumstances at the time the transaction is entered into.
Acts 1988, No. 306, §1 ; Acts 2006, No. 533, §1.
§1-204. Value
§1-205. Reasonable time; seasonableness
(a) Whether a time for taking an action required by this Title is reasonable depends on the nature, purpose, and circumstances of the action.
(b) 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.
Added by Acts 1974, No. 92, §1, eff. Jan. 1, 1975 ; Acts 2006, No. 533, §1.
§1-206. Presumptions
Whenever this Title creates a "presumption" with respect to a fact, or provides that a fact is "presumed," the trier of fact must find the existence of the fact unless and until evidence is introduced that supports a finding of its nonexistence.
Acts 2006, No. 533, §1.
PART 3. TERRITORIAL APPLICABILITY AND GENERAL RULES
§1-302. Variation by agreement
(a) Except as otherwise provided in Subsection (b) or elsewhere in this Title, the effect of provisions of this Title may be varied by agreement.
(b) The obligations of good faith, diligence, reasonableness, and care prescribed by this Title may not be disclaimed by agreement. The parties, by agreement, may determine the standards by which the performance of those obligations is to be measured if those standards are not manifestly unreasonable. Whenever this Title requires an action to be taken within a reasonable time, a time that is not manifestly unreasonable may be fixed by agreement.
(c) The presence in certain provisions of this Title of the phrase "unless otherwise agreed", or words of similar import, does not imply that the effect of other provisions may not be varied by agreement under this Section.
Acts 2006, No. 533, §1.
§1-303. Course of performance, course of dealing, and usage of trade
(a) A "course of performance" is a sequence of conduct between the parties to a particular transaction that exists if:
(1) the agreement of the parties with respect to the transaction involves repeated occasions for performance by a party; and
(2) the other party, with knowledge of the nature of the performance and opportunity for objection to it, accepts the performance or acquiesces in it without objection.
(b) A "course of dealing" is a sequence of conduct concerning previous transactions between the parties to a particular transaction that is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct.
(c) A "usage of trade" is any practice or method of dealing having such regularity of observance in a place, vocation, or trade as to justify an expectation that it will be observed with respect to the transaction in question. The existence and scope of such a usage must be proved as facts. If it is established that such a usage is embodied in a trade code or similar record, the interpretation of the record is a question of law.
(d) A course of performance or course of dealing between the parties or usage of trade in the vocation or trade in which they are engaged or of which they are or should be aware is relevant in ascertaining the meaning of the parties' agreement, may give particular meaning to specific terms of the agreement, and may supplement or qualify the terms of the agreement. A usage of trade applicable in the place in which part of the performance under the agreement is to occur may be so utilized as to that part of the performance.
(e) Except as otherwise provided in Subsection (f), the express terms of an agreement and any applicable course of performance, course of dealing, or usage of 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 of dealing and usage of trade; and
(3) course of dealing prevails over usage of trade.
(f) A course of performance is relevant to show a waiver or modification of any term inconsistent with the course of performance.
(g) Evidence of a relevant usage of trade offered by one party is not admissible unless that party has given the other party notice that the court finds sufficient to prevent unfair surprise to the other party.
Acts 2006, No. 533, §1.
§1-304. Obligation of good faith
Every contract or duty within this Title imposes an obligation of good faith in its performance and enforcement. Under this Section, "good faith" has the meaning with which that term is used in the title on "Conventional Obligations or Contracts" in the Louisiana Civil Code.
Acts 2006, No. 533, §1.
§1-305. Remedies to be liberally administered
(a) The remedies provided by this Title shall be liberally administered to the end that the aggrieved party may be put in as good a position as if the other party had fully performed.
(b) [Reserved.]
Acts 2006, No. 533, §1.
§1-306. [Reserved.]
§1-307. Prima facie evidence by third-party documents
A document in due form purporting to be a bill of lading, policy or certificate of insurance, official weigher's or inspector's certificate, consular invoice, or any other document authorized or required by a contract to be issued by a third party is prima facie evidence of its own authenticity and genuineness and of the facts stated in the document by the third party.
Acts 2006, No. 533, §1.
§1-308. Performance or acceptance under reservation of rights
(a) A party that with explicit reservation of rights performs or promises performance or assents to performance in a manner demanded or offered by the other party does not thereby prejudice the rights reserved. Such words as "without prejudice", "under protest", or the like are sufficient.
(b) Subsection (a) does not apply to an accord and satisfaction.
Acts 2006, No. 533, §1.
§1-309. Option to accelerate at will
A term providing that one party or that party's successor in interest may accelerate payment or performance or require collateral or additional collateral "at will" or "when the party deems itself insecure" or words of similar import, means that the party has power to do so only if that party in good faith believes that the prospect of payment or performance is impaired. The burden of establishing lack of good faith is on the party against which the power has been exercised.
Acts 2006, No. 533, §1.
§1-310. Subordinated obligations
An obligation may be issued as subordinated to performance of another obligation of the person obligated, or a creditor may subordinate its right to performance of an obligation by agreement with either the person obligated or another creditor of the person obligated. Subordination does not create a security interest as against either the common debtor or a subordinated creditor.
Acts 2006, No. 533, §1.