41-09-03. (9-103) Purchase-money security interest - Application of payments -
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Burden of establishing.
1. In this section:
a. "Purchase-money collateral" means goods or software that secures a
purchase-money obligation incurred with respect to that collateral; and
b. "Purchase-money obligation" means an obligation of an obligor incurred as all or
part of the price of the collateral or for value given to enable the debtor to acquire
rights in or the use of the collateral if the value is in fact so used.
2. A security interest in goods is a purchase-money security interest:
a. To the extent that the goods are purchase-money collateral with respect to that
security interest;
b. If the security interest is in inventory that is or was purchase-money collateral,
also to the extent that the security interest secures a purchase-money obligation
incurred with respect to other inventory in which the secured party holds or held a
purchase-money security interest; and
c. Also to the extent that the security interest secures a purchase-money obligation
incurred with respect to software in which the secured party holds or held a
purchase-money security interest.
3. A security interest in software is a purchase-money security interest to the extent that
the security interest also secures a purchase-money obligation incurred with respect to
goods in which the secured party holds or held a purchase-money security interest if:
a. The debtor acquired its interest in the software in an integrated transaction in
which the debtor acquired an interest in the goods; and
b. The debtor acquired its interest in the software for the principal purpose of using
the software in the goods.
4. The security interest of a consignor in goods that are the subject of a consignment is a
purchase-money security interest in inventory.
5. If the extent to which a security interest is a purchase-money security interest depends
on the application of a payment to a particular obligation, the payment must be
applied:
a. In accordance with any reasonable method of application to which the parties
agree;
b. In the absence of the parties' agreement to a reasonable method, in accordance
with any intention of the obligor manifested at or before the time of payment; or
c. In the absence of an agreement to a reasonable method and a timely
manifestation of the obligor's intention, in the following order:
(1)To obligations that are not secured; and
(2)If more than one obligation is secured, to obligations secured by
purchase-money security interests in the order in which those obligations
were incurred. 6. A purchase-money security interest does not lose its status as such, even if:
a. The purchase-money collateral also secures an obligation that is not a
purchase-money obligation;
b. Collateral that is not purchase-money collateral also secures the purchase-money
obligation; or
c. The purchase-money obligation has been renewed, refinanced, consolidated, or
restructured. 7. A secured party claiming a purchase-money security interest has the burden of
establishing the extent to which the security interest is a purchase-money security
interest.
41-09-04. (9-104) Control of deposit account or uncertificated certificate of deposit. 1. A secured party has control of a deposit account or uncertificated certificate of deposit
if:
a. The secured party is the bank with which the deposit account or uncertificated
certificate of deposit is maintained;
b. The debtor, secured party, and bank have agreed in a signed record that the bank
will comply with instructions originated by the secured party directing disposition
of the funds in the deposit account or uncertificated certificate of deposit without
further consent by the debtor;
c. The secured party becomes the bank's customer with respect to the deposit
account or uncertificated certificate of deposit; or
d. Another person, other than the debtor:
(1)Has control of the deposit account and acknowledges that it has control on
behalf of the secured party; or
(2)Obtains control of the deposit account after having acknowledged that it will
obtain control of the deposit account on behalf of the secured party. 2. A secured party that has satisfied subsection 1 has control, even if the debtor retains
the right to direct the disposition of funds from the deposit account or uncertificated
certificate of deposit.
41-09-05. (9-105) Control of electronic copy of record evidencing chattel paper. 1. A purchaser has control of an authoritative electronic copy of a record evidencing
chattel paper if a system employed for evidencing the assignment of interests in the
chattel paper reliably establishes the purchaser as the person to which the
authoritative electronic copy was assigned. 2. A system satisfies subsection 1 if the record or records evidencing the chattel paper
are created, stored, and assigned in such a manner that:
a. A single authoritative copy of the record or records exists which is unique,
identifiable, and, except as otherwise provided in subdivisions d, e, and f,
unalterable;
b. The authoritative copy identifies the purchaser as the assignee of the record or
records;
c. The authoritative copy is communicated to and maintained by the purchaser or its
designated custodian;
d. Copies or amendments that add or change an identified assignee of the
authoritative copy can be made only with the consent of the purchaser;
e. Each copy of the authoritative copy and any copy of a copy is readily identifiable
as a copy that is not the authoritative copy; and
f. Any amendment of the authoritative copy is readily identifiable as authorized or
unauthorized. 3. A system satisfies subsection 1, and a purchaser has control of an authoritative
electronic copy of a record evidencing chattel paper, if the electronic copy, a record
attached to or logically associated with the electronic copy, or a system in which the
electronic copy is recorded:
a. Enables the purchaser readily to identify each electronic copy as either an
authoritative copy or a nonauthoritative copy;
b. Enables the purchaser readily to identify itself in any way, including by name,
identifying number, cryptographic key, office, or account number, as the assignee
of the authoritative electronic copy; and
c. Gives the purchaser exclusive power, subject to subsection 4, to:
(1)Prevent others from adding or changing an identified assignee of the
authoritative electronic copy; and
(2)Transfer control of the authoritative electronic copy. 4. Subject to subsection 5, a power is exclusive under subdivision c of subsection 3 even
if:
a. The authoritative electronic copy, a record attached to or logically associated with
the authoritative electronic copy, or a system in which the authoritative electronic
copy is recorded limits the use of the authoritative electronic copy or has a
protocol programmed to cause a change, including a transfer or loss of control; or
b. The power is shared with another person. 5. A power of a purchaser is not shared with another person under subdivision b of
subsection 4 and the purchaser's power is not exclusive if:
a. The purchaser can exercise the power only if the power also is exercised by the
other person; and
b. The other person:
(1)Can exercise the power without exercise of the power by the purchaser; or
(2)Is the transferor to the purchaser of an interest in the chattel paper. 6. If a purchaser has the powers specified in subdivision c of subsection 3, the powers
are presumed to be exclusive. 7. A purchaser has control of an authoritative electronic copy of a record evidencing
chattel paper if another person, other than the transferor to the purchaser of an
interest in the chattel paper:
a. Has control of the authoritative electronic copy and acknowledges that it has
control on behalf of the purchaser; or
b. Obtains control of the authoritative electronic copy after having acknowledged
that it will obtain control of the electronic copy on behalf of the purchaser.
41-09-05.1. (9-105A) Control of electronic money. 1. A person has control of electronic money if:
a. The electronic money, a record attached to or logically associated with the
electronic money, or a system in which the electronic money is recorded gives the
person:
(1)Power to avail itself of substantially all the benefit from the electronic money;
and
(2)Exclusive power, subject to subsection 2, to:
(a)Prevent others from availing themselves of substantially all the benefit
from the electronic money; and
(b)Transfer control of the electronic money to another person or cause
another person to obtain control of other electronic money as a result
of the transfer of the electronic money; and
b. The electronic money, a record attached to or logically associated with the
electronic money, or a system in which the electronic money is recorded enables
the person readily to identify itself in any way, including by name, identifying
number, cryptographic key, office, or account number, as having the powers
under subdivision a.
2. Subject to subsection 3, a power is exclusive under paragraph 2 of subdivision a of
subsection 1 even if:
a. The electronic money, a record attached to or logically associated with the
electronic money, or a system in which the electronic money is recorded limits the
use of the electronic money or has a protocol programmed to cause a change,
including a transfer or loss of control; or
b. The power is shared with another person.
3. A power of a person is not shared with another person under subdivision b of
subsection 2 and the person's power is not exclusive if:
a. The person can exercise the power only if the power also is exercised by the
other person; and
b. The other person:
(1)Can exercise the power without exercise of the power by the person; or
(2)Is the transferor to the person of an interest in the electronic money.
4. If a person has the powers specified in paragraph 2 of subdivision a of subsection 1,
the powers are presumed to be exclusive.
5. A person has control of electronic money if another person, other than the transferor to
the person of an interest in the electronic money:
a. Has control of the electronic money and acknowledges that it has control on
behalf of the person; or
b. Obtains control of the electronic money after having acknowledged that it will
obtain control of the electronic money on behalf of the person.