41-12-06. (12-106) Discharge of account debtor on controllable account or
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controllable payment intangible.
1. An account debtor on a controllable account or controllable payment intangible may
discharge its obligation by paying:
a. The person having control of the controllable electronic record that evidences the
controllable account or controllable payment intangible; or
b. Except as provided in subsection 2, a person that formerly had control of the
controllable electronic record.
2. Subject to subsection 4, the account debtor may not discharge its obligation by paying
a person that formerly had control of the controllable electronic record if the account
debtor receives a notification that:
a. Is signed by a person that formerly had control or the person to which control was
transferred;
b. Reasonably identifies the controllable account or controllable payment intangible;
c. Notifies the account debtor that control of the controllable electronic record that
evidences the controllable account or controllable payment intangible was
transferred;
d. Identifies the transferee, in any reasonable way, including by name, identifying
number, cryptographic key, office, or account number; and
e. Provides a commercially reasonable method by which the account debtor is to
pay the transferee.
3. After receipt of a notification that complies with subsection 2, the account debtor may
discharge its obligation by paying in accordance with the notification and may not
discharge the obligation by paying a person that formerly had control.
4. Subject to subsection 8, notification is ineffective under subsection 2:
a. Unless, before the notification is sent, the account debtor and the person that, at
that time, had control of the controllable electronic record that evidences the
controllable account or controllable payment intangible agree in a signed record
to a commercially reasonable method by which a person may furnish reasonable
proof that control has been transferred;
b. To the extent an agreement between the account debtor and seller of a payment
intangible limits the account debtor's duty to pay a person other than the seller
and the limitation is effective under law other than this chapter; or
c. At the option of the account debtor, if the notification notifies the account debtor
to:
(1)Divide a payment;
(2)Make less than the full amount of an installment or other periodic payment;
or
(3)Pay any part of a payment by more than one method or to more than one
person.
5. Subject to subsection 8, if requested by the account debtor, the person giving the
notification under subsection 2 seasonably shall furnish reasonable proof, using the
method in the agreement referred to in subdivision a of subsection 4, that control of
the controllable electronic record has been transferred. Unless the person complies
with the request, the account debtor may discharge its obligation by paying a person
that formerly had control, even if the account debtor has received a notification under
subsection 2.
6. A person furnishes reasonable proof under subsection 5 that control has been
transferred if the person demonstrates, using the method in the agreement referred to
in subdivision a of subsection 4, that the transferee has the power to:
a. Avail itself of substantially all the benefit from the controllable electronic record;
b. Prevent others from availing themselves of substantially all the benefit from the
controllable electronic record; and
c. Transfer the powers specified in subdivisions a and b to another person. 7. Subject to subsection 8, an account debtor may not waive or vary its rights under
subdivision a of subsection 4 and subsection 5 or its option under subdivision c of
subsection 4. 8. This section is subject to law other than this chapter which establishes a different rule
for an account debtor who is an individual and who incurred the obligation primarily for
personal, family, or household purposes.
41-12-07. (12-107) Governing law. 1. Except as provided in subsection 2, the local law of a controllable electronic record's
jurisdiction governs a matter covered by this chapter. 2. For a controllable electronic record that evidences a controllable account or
controllable payment intangible, the local law of the controllable electronic record's
jurisdiction governs a matter covered by section 41-12-06 unless an effective
agreement determines that the local law of another jurisdiction governs. 3. The following rules determine a controllable electronic record's jurisdiction under this
section:
a. If the controllable electronic record, or a record attached to or logically associated
with the controllable electronic record and readily available for review, expressly
provides that a particular jurisdiction is the controllable electronic record's
jurisdiction for purposes of this chapter or title, that jurisdiction is the controllable
electronic record's jurisdiction.
b. If subdivision a does not apply and the rules of the system in which the
controllable electronic record is recorded are readily available for review and
expressly provide that a particular jurisdiction is the controllable electronic
record's jurisdiction for purposes of this chapter or title, that jurisdiction is the
controllable electronic record's jurisdiction.
c. If subdivisions a and b do not apply and the controllable electronic record, or a
record attached to or logically associated with the controllable electronic record
and readily available for review, expressly provides that the controllable electronic
record is governed by the law of a particular jurisdiction, that jurisdiction is the
controllable electronic record's jurisdiction.
d. If subdivisions a, b, and c do not apply and the rules of the system in which the
controllable electronic record is recorded are readily available for review and
expressly provide that the controllable electronic record or the system is
governed by the law of a particular jurisdiction, that jurisdiction is the controllable
electronic record's jurisdiction.
e. If subdivisions a through d do not apply, the controllable electronic record's
jurisdiction is the District of Columbia. 4. If subdivision e of subsection 3 applies and this chapter is not in effect in the District of
Columbia without material modification, the governing law for a matter covered by this
chapter is the law of the District of Columbia as though Article 12 were in effect in the
District of Columbia without material modification. In this subsection, "Article 12"
means Article 12 of Uniform Commercial Code Amendments (2022). 5. To the extent subsections 1 and 2 provide that the local law of the controllable
electronic record's jurisdiction governs a matter covered by this chapter, that law
governs even if the matter or a transaction to which the matter relates does not bear
any relation to the controllable electronic record's jurisdiction. 6. The rights acquired under section 41-12-04 by a purchaser or qualifying purchaser are
governed by the law applicable under this section at the time of purchase.