KRS 355.7-106: Control of electronic document of title.

(1) A person has control of an electronic document of title if a system employed for

evidencing the transfer of interests in the electronic document reliably establishes

that person as the person to which the electronic document was issued or

transferred.

(2) A system satisfies subsection (1) of this section, and a person has control of an

electronic document of title, if the document is created, stored, and transferred in a

manner that:

(a) A single authoritative copy of the document exists which is unique,

identifiable, and, except as otherwise provided in paragraphs (d), (e), and (f)

of this subsection, unalterable;

(b) The authoritative copy identifies the person asserting control as:

1. The person to which the document was issued; or

2. If the authoritative copy indicates that the document has been

transferred, the person to which the document was most recently

transferred;

(c) The authoritative copy is communicated to and maintained by the person

asserting control or its designated custodian;

(d) Copies or amendments that add or change an identified transferee of the

authoritative copy can be made only with the consent of the person asserting

control;

(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 s ubsection (1) of this section, and a person has control of an

electronic document of title, if an authoritative electronic copy of the document, a

record attached to or logically associated with the electronic copy, or a system in

which the electronic copy is recorded:

(a) Enables the person to readily identify each electronic copy as either an

authoritative copy or a nonauthoritative copy;

(b) Enables the person to readily identify itself in any way, including by name,

identifying number, cryptographic key , office, or account number, as the

person to which each authoritative electronic copy was issued or transferred;

and

(c) Gives the person exclusive power, subject to subsection (4) of this section, to:

1. Prevent others from adding or changing the person to which each

authoritative electronic copy has been issued or transferred; and

2. Transfer control of each authoritative electronic copy.

(4) Subject to subsection (5) of this section, a power is exclusive under subsection

(3)(c)1. and 2. of this section 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 document of title or has a

protocol that is 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 person is not shared with another person under subsection (4)(b) of

this section 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 document of title.

(6) If a person has the powers specified in subsection (3)(c)1. and 2. of this section, the

powers are presumed to be exclusive.

(7) A person has control of an electronic document of title if another person, other than

the transferor to the person of an interest in the document:

(a) Has control of the document and acknowledges that it has control on behalf of

the person; or

(b) Obtains control of the document after having acknowledged that it will obtain

control of the document on behalf of the person.

(8) A person that has control under this section is not required to acknowledge that it

has control on behalf of another person.

(9) If a person acknowledges that it has or will obtain control on behalf of another

person, unless the person otherwise agrees or law other than this article or Article 9

of this chapter otherwise provides, the person does not owe any duty to the other

person and is not required to confirm the acknowledgment to any other person.