LD 2245
pg. 68
Page 67 of 493 An Act to Adopt the Model Revised Article 9 Secured Transactions Page 69 of 493
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LR 1087
Item 1

 
2. "Control" of Electronic Chattel Paper. This Article covers
security interests in "electronic chattel paper," a new term
defined in Section 9-102 [Maine cite section 9-1102]. This section
governs how "control" of electronic chattel paper may be obtained.
A secured party's control of electronic chattel paper (i) may
substitute for an authenticated security agreement for purposes of
attachment under Section 9-203 [Maine cite section 9-1203], (ii) is
a method of perfection under Section 9-314 [Maine cite section 9-
1314], and (iii) is a condition for obtaining special, non-temporal
priority under Section 9-330 [Maine cite section 9-1330]. Because
electronic chattel paper cannot be transferred, assigned, or
possessed in the same manner as tangible chattel paper, a special
definition of control is necessary. In descriptive terms, this
section provides that control of electronic chattel paper is the
functional equivalent of possession of "tangible chattel paper" (a
term also defined in Section 9-102) [Maine cite section 9-1102].

 
3. "Authoritative Copy" of Electronic Chattel Paper. One
requirement for establishing control is that a particular copy be
an "authoritative copy. " Although other copies may exist, they
must be distinguished from the authoritative copy. This may be
achieved, for example, through the methods of authentication that
are used or by business practices involving the marking of any
additional copies. When tangible chattel paper is converted to
electronic chattel paper, in order to establish that a copy of
the electronic chattel paper is the authoritative copy it may be
necessary to show that the tangible chattel paper no longer
exists or has been permanently marked to indicate that it is not
the authoritative copy.

 
4. Development of Control Systems. This Article leaves to
the marketplace the development of systems and procedures,
through a combination of suitable technologies and business
practices, for dealing with control of electronic chattel paper
in a commercial context. However, achieving control under this
section requires more than the agreement of interested persons
that the elements of control are satisfied. For example,
paragraph (4) [Maine cite paragraph (d)] contemplates that
control requires that it be a physical impossibility (or
sufficiently unlikely or implausible so as to approach practical
impossibility) to add or change an identified assignee without
the participation of the secured party (or its authorized
representative). It would not be enough for the assignor merely
to agree that it will not change the identified assignee without
the assignee-secured party's consent. However, the standards
applied to determine whether a party is in control of electronic
chattel paper should not be more stringent than the standards now
applied to determine whether a party is in possession of tangible


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