Title 5, Uniform Commercial Code

Indorsement; Instructions. (1) An indorsement of a certificated security in registered form is made when an appropriate person signs on it or on a separate document an assignment or transfer of the security or a power to assign or transfer it or his signature is written without m…

Effect of Indorsement Without Delivery. An indorsement of a certificated security, whether special or in blank, does not constitute a transfer until delivery of the certificated security on which it appears or, if the indorsement is on a separate document, until delivery of both …

Indorsement of Certificated Security in Bearer Form. An indorsement of a certificated security in bearer form may give notice of adverse claims (5 CMC § 8304) but does not otherwise affect any right to registration the holder possesses. Source: PL 3-56, § 1 (§ 8310).

Effect of Unauthorized Indorsement or Instruction. Unless the owner or pledgee has ratified an unauthorized indorsement or instruction or is otherwise precluded from asserting its ineffectiveness: (a) He may assert its ineffectiveness against the issuer or any purchaser, other th…

Effect of Guaranteeing Signature, Indorsement or Instruction. (1) Any person guaranteeing a signature of an indorser of a certificated security warrants that at the time of signing: (a) The signature was genuine; (b) The signer was an appropriate person to indorse (5 CMC § 8308);…

When Transfer to Purchaser Occurs; Financial Intermediary as Bona Fide Purchaser; “Financial Intermediary.” (1) Transfer of a security or a limited interest (including a security interest) therein to a purchaser occurs only: (a) At the time he or a person designated by him acquir…

Duty to Transfer, When Completed. (1) Unless otherwise agreed, if a sale of a security is made on an exchange or otherwise through brokers: (a) The selling customer fulfills his duty to transfer at the time he: (i) Places a certificated security in the possession of the selling b…

Action Against Transferee Based Upon Wrongful Transfer. (1) Any person against whom the transfer of a security is wrongful for any reason, including his incapacity, as against anyone except a bona fide purchaser, may: (a) Reclaim possession of the certificated security wrongfully…

Purchaser’s Right to Requisites for Registration of Transfer, Pledge, or Release on Books. Unless otherwise agreed, the transferor of a certificated security or the transferor, pledgor, or pledgee of an uncertificated security on due demand must supply his purchaser with any proo…

Creditors’ Rights. (1) Subject to the exceptions in subsections (3) and (4) of this section, no attachment or levy upon a certificated security or any share or other interest represented thereby which is outstanding is valid until the security is actually seized by the officer ma…

No Conversion by Good Faith Conduct. An agent or bailee who in good faith (including observance of reasonable commercial standards if he is in the business of buying, selling, or otherwise dealing with securities) has received certificated securities and sold, pledged, or deliver…

Statute of Frauds. A contract for the sale of securities is not enforceable by way of action or defense unless: (a) There is some writing signed by the party against whom enforcement is sought or by his authorized agent or broker, sufficient to indicate that a contract has been m…

Transfer or Pledge Within Central Depository System. (1) In addition to other methods, a transfer, pledge, or release of a security or any interest therein may be effected by the making of appropriate entries on the books of a clearing corporation reducing the account of the tran…

Enforceability, Attachment, Perfection and Termination of Security Interests. (1) A security interest in a security is enforceable and can attach only if it is transferred to the secured party or a person designated by him pursuant to a provision of 5 CMC § 8313(1). (2) A securit…

Persons Who Take Priority Over Unperfected Security Interests; Rights of “Lien Creditor.” (1) Except as otherwise provided in subsection (2) of this section, an unperfected security interest is subordinate to the rights of: (a) Persons entitled to priority under 5 CMC § 9312; (b)…

When Filing Is Required to Perfect Security Interest; Security Interests to Which Filing Provisions of This Division Do Not Apply. (1) A financing statement must be filed to perfect all security interests except the following: (a) A security interest in collateral in possession o…

When Security Interest Is Perfected; Continuity of Perfection. (1) A security interest is perfected when it has attached and when all of the applicable steps required for perfection have been taken. Such steps are specified in 5 CMC § 9302, 9304, 9305 and 9306. If such steps are …

Perfection of Security Interest in Instruments, Documents, and Goods Covered by Documents; Perfection by Permissive Filing; Temporary Perfection Without Filing or Transfer of Possession. (1) A security interest in chattel paper or negotiable documents may be perfected by filing. …

When Possession by Secured Party Perfects Security Interest Without Filing. A security interest in letters of credit and advices of credit (5 CMC § 5116(2)(a)), goods, instruments (other than certificated securities), money, negotiable documents, or chattel paper may be perfected…

“Proceeds”; Secured Party’s Rights on Disposition of Collateral. (1) “Proceeds” includes whatever is received upon the sale, exchange, collection or other disposition of collateral or proceeds. Insurance payable by reason of loss or damage to the collateral is proceeds, except to…

Protection of Buyers of Goods. (1) A buyer in ordinary course of business (5 CMC § 1201(9)) other than a person buying farm products from a person engaged in farming operations takes free of a security interest created by his seller even though the security interest is perfected …

Purchase of Chattel Paper and Instruments. A purchaser of chattel paper or an instrument who gives new value and takes possession of it in the ordinary course of his business has priority over a security interest in the chattel paper or instrument: (a) Which is perfected under 5 …

Protection of Purchasers of Instruments, Documents and Securities. Nothing in this division limits the rights of a holder in due course of a negotiable instrument (5 CMC § 3302) or a holder to whom a negotiable document of title has been duly negotiated (5 CMC § 7501) or a bona f…

Priority of Certain Liens Arising by Operation of Law. When a person in the ordinary course of his business furnishes services or materials with respect to goods subject to a security interest, a lien upon goods in the possession of such person given by statute or rule of law for…

Alienability of Debtor’s Rights: Judicial Process. The debtor’s rights in collateral may be voluntarily or involuntarily transferred (by way of sale, creation of a security interest, attachment, levy, garnishment or other judicial process) notwithstanding a provision in the secur…

Priorities Among Conflicting Security Interests in the Same Collateral. (1) The rules of priority stated in other sections of this chapter and in the following sections shall govern when applicable: 5 CMC § 4208 with respect to the security interests of collecting banks in items …

Priority of Security Interests in Fixtures. (1) In this section and in the provisions of chapter 4 of this division [5 CMC § 9401 et seq.] referring to fixture filing, unless the context otherwise requires: (a) Goods are “fixtures” when they become so related to particular real e…

Accessions. (1) A security interest in goods which attaches before they are installed in or affixed to other goods takes priority as to the goods installed or affixed (called in this section “accessions”) over the claims of all persons to the whole except as stated in subsection …

Priority When Goods Are Commingled or Processed. (1) If a security interest in goods was perfected and subsequently the goods or a part thereof have become part of a product or mass, the security interest continues in the product or mass if: (a) The goods are so manufactured, pro…

Priority Subject to Subordination. Nothing in this division prevents subordination by agreement by any person entitled to priority. Source: PL 3-56, § 1 (§ 9316).

Secured Party Not Obligated on Contract of Debtor. The mere existence of a security interest or authority given to the debtor to dispose of or use collateral does not impose contract or tort liability upon the secured party for the debtor’s acts or omissions. Source: PL 3-56, § 1…

Defenses Against Assignee; Modification of Contract After Notification of Assignment; Term Prohibiting Assignment Ineffective; Identification and Proof of Assignment. (1) Unless an account debtor has made an enforceable agreement not to assert defenses or claims arising out of a …