N.Y. Uniform Commercial Code Law § 12-104: Rights in Controllable Account, Controllable Electronic Record, and Controllable Payment Intangible

Section 12--104. Rights in Controllable Account, Controllable Electronic

Record, and Controllable Payment Intangible.

(a) Applicability of section to controllable account and controllable

payment intangible. This section applies to the acquisition and purchase

of rights in a controllable account or controllable payment intangible,

including the rights and benefits under subsections (c), (d), (e), (g),

and (h) of a purchaser and qualifying purchaser, in the same manner this

section applies to a controllable electronic record.

(b) Control of controllable account and controllable payment

intangible. To determine whether a purchaser of a controllable account

or a controllable payment intangible is a qualifying purchaser, the

purchaser obtains control of the account or payment intangible if it

obtains control of the controllable electronic record that evidences the

account or payment intangible.

(c) Applicability of other law to acquisition of rights. Except as

provided in this section, law other than this article determines whether

a person acquires a right in a controllable electronic record and the

right the person acquires.

(d) Shelter principle and purchase of limited interest. A purchaser of

a controllable electronic record acquires all rights in the controllable

electronic record that the transferor had or had power to transfer,

except that a purchaser of a limited interest in a controllable

electronic record acquires rights only to the extent of the interest

purchased.

(e) Rights of qualifying purchaser. A qualifying purchaser acquires

its rights in the controllable electronic record free of a claim of a

property right in the controllable electronic record.

(f) Limitation of rights of qualifying purchaser in other property.

Except as provided in subsections (a) and (e) for a controllable account

and a controllable payment intangible or law other than this article, a

qualifying purchaser takes a right to payment, right to performance, or

other interest in property evidenced by the controllable electronic

record subject to a claim of a property right in the right to payment,

right to performance, or other interest in property.

(g) No-action protection for qualifying purchaser. An action may not

be asserted against a qualifying purchaser based on both a purchase by

the qualifying purchaser of a controllable electronic record and a claim

of a property right in another controllable electronic record, whether

the action is framed in conversion, replevin, constructive trust,

equitable lien, or other theory.

(h) Filing not notice. Filing of a financing statement under Article 9

is not notice of a claim of a property right in a controllable

electronic record.