Adopting revised Article 7 of the Uniform Commercial Code, concerning documents of title

These title documents are paper documents, consisting of originals and copies, and may be either negotiable or nonnegotiable. The use of paper documents to transfer title and other ownership rights has worked well in the past, but as commercial transactions in the United States and around the world are increasingly conducted and facilitated through electronic means the current-law requirements for paper documents may now impede the transfer of title to goods that are moved or shipped from one location to another. Revised article 7 of the UCC addresses this issue by permitting electronic documents of title for the transfer of goods in interstate commerce.

Under the bill, article 7 of the UCC is revised to provide that a lawful document of title includes an electronic document of title, which is evidenced by a record consisting of information stored in an electronic medium. Under the bill, for the purpose of transferring ownership rights in tangible goods, electronic documents of title are the legal equivalent of paper documents of title. The remaining portions of current law relating to article 7 of the UCC are amended to facilitate the use of either electronic documents of title or the current paper documents of title. Most importantly, revised article 7 of the UCC, as contained in the bill, creates new definitions of "record" and "sign." Under the bill, a record is "information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form." The term "sign" is defined to mean "to execute or adopt a tangible symbol" and "to attach or logically associate with the record an electronic sound, symbol, or process." Wherever the term "writing" or an equivalent was previously used in article 7 of the UCC, the term "record" is uniformly used in revised article 7 of the UCC. When a document is required to be signed under article 7 of the UCC, electronic signing satisfies the requirement under revised article 7 of the UCC.

Finally, the bill incorporates all technical or nonsubstantive portions of revised article 7 of the UCC that update or clarify the earlier version of article 7 of the UCC, as well as eliminates provisions that no longer have legal effect.