The term includes a bill of lading, transport document, dock warrant, dock receipt, warehouse receipt, and order for delivery of goods.

An electronic document of title means a document of title evidenced by a record consisting of information stored in an electronic medium.

A tangible document of title means a document of title evidenced by a record consisting of information that is inscribed on a tangible medium.

(16A) "Electronic" means relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities.

(17) “Fault” means a default, breach, or wrongful act or omission.

(18) “Fungible goods” means:

(A) goods of which any unit, by nature or usage of trade, 04-09-2025 15:36:43 ANS152 As Engrossed:

S4/9/25 HB1746 is the equivalent of any other like unit;

or (B) goods that by agreement are treated as equivalent.

(19) “Genuine” means free of forgery or counterfeiting.

(20) “Good faith,” except otherwise provided in Chapter 5, means honesty in fact and the observance of reasonable commercial standards of fair dealing.

(21) “Holder” means:

(A) the person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession;

(B) the person in possession of a negotiable tangible document of title if the goods are deliverable either to bearer or to the order of the person in possession;

or (C) the person in control, other than pursuant to § 4-7- 106(g), of a negotiable electronic document of title.

(22) “Insolvency proceeding” includes an assignment for the benefit of creditors or other proceeding intended to liquidate or rehabilitate the estate of the person involved.

(23) “Insolvent” means:

(A) having generally ceased to pay debts in the ordinary course of business other than as a result of bona fide dispute;

(B) being unable to pay debts as they become due;

or (C) being insolvent within the meaning of federal bankruptcy law.

(24) "Money" means a medium of exchange that is currently authorized or adopted by a domestic or foreign government.

"Money" does not include a central bank digital currency.currency." AND Page 36, delete lines 26 through 28, and substitute the following:

(25)"(29) “Organization”"Deposit account" means a persondemand, othertime, thansavings, anpassbook, individual.or similar account maintained with a bank.

(26)The “Party”,term as"deposit distinguishedaccount" fromdoes anot “thirdinclude party”,investment meansproperty, acentral personbank thatdigital hascurrency, engagedor inaccounts aevidenced transactionby oran madeinstrument." an*.ANS525* agreementTheAmendment subjectwas toread thisthe subtitle.first time, rules suspended and read the second time and _______________________ By:

(27)Senator “Person”Dees meansANS/ANS an- individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, government, governmental subdivision, agency, or instrumentality, 04-09-2025 15:36:4302:05:13 ANS152_________________________ AsANS525 Engrossed:Secretary

S4/9/25 HB1746 public corporation, or any other legal or commercial entity.

The term includes a protected series, however denominated, of an entity if the protected series is established under law other than the Uniform Commercial Code that limits, or limits if conditions specified under the law are satisfied, the ability of a creditor of the entity or of any other protected series of the entity to satisfy a claim from assets of the protected series.

(28) “Present value” means the amount as of a date certain of one (1) or more sums payable in the future, discounted to the date certain by use of either an interest rate specified by the parties if that rate is not manifestly unreasonable at the time the transaction is entered into or, if an interest rate is not so specified, a commercially reasonable rate that takes into account the facts and circumstances at the time the transaction is entered into.

(29) “Purchase” means taking by sale, lease, discount, negotiation, mortgage, pledge, lien, security interest, issue or reissue, gift, or any other voluntary transaction creating an interest in property.

(30) “Purchaser” means a person that takes by purchase.

(31) “Record” means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.

(32) “Remedy” means any remedial right to which an aggrieved party is entitled with or without resort to a tribunal.

(33) “Representative” means a person empowered to act for another, including an agent, an officer of a corporation or association, and a trustee, executor, or administrator of an estate.

(34) “Right” includes remedy.

(35) “Security interest” means an interest in personal property or fixtures which secures payment or performance of an obligation.

“Security interest” includes any interest of a consignor and a buyer of accounts, chattel paper, a payment intangible, or a promissory note in a transaction that is subject to Chapter 9.

“Security interest” does not include the special property interest of a buyer of goods on identification of those goods to a contract for sale under § 4-2-401, but a buyer may also acquire a “security interest” by complying with Chapter 9.

Except as otherwise provided in § 4-2-505, the right of a seller or lessor of goods under Chapter 2 or 2A to retain or acquire possession of the goods is not a “security interest”, 04-09-2025 15:36:43 ANS152 As Engrossed:

S4/9/25 HB1746 but a seller or lessor may also acquire a “security interest” by complying with Chapter 9.

The retention or reservation of title by a seller of goods notwithstanding shipment or delivery to the buyer under § 4-2-401 is limited in effect to a reservation of a “security interest.” Whether a transaction in the form of a lease creates a “security interest” is determined pursuant to § 4-1-203.

(36) “Send”, in connection with a writing, record, or notice notification, means:

(A) to deposit in the mail, or deliver for transmission, or transmit by any other usual means of communication, with postage or cost of transmission provided for, and properly addressed and, in the case of an instrument, to an address specified thereon or otherwise agreed, or if there be none addressed to any address reasonable under the circumstances;

or (B) in any other way to cause to be received any record or notice within the time it would have arrived if properly sent to cause the record or notification to be received within the time it would have been received if properly sent under subparagraph (A).

(37) “Signed” includes using any symbol executed or adopted with present intention to adopt or accept a writing "Sign" means, with present intent to authenticate or adopt a record:

(A) execute or adopt a tangible symbol;

or (B) attach to or logically associate with the record an electronic symbol, sound, or process.

"Signed", "signing", and "signature" have corresponding meanings.

(38) “State” means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States.

(39) “Surety” includes a guarantor or other secondary obligor.

(40) “Term” means a portion of an agreement that relates to a particular matter.

(41) “Unauthorized signature” means a signature made without actual, implied, or apparent authority.

The term includes a forgery.

(42) “Warehouse receipt” means a document of title issued by a person engaged in the business of storing goods for hire.

(43) “Writing” includes printing, typewriting, or any other intentional reduction to tangible form.

“Written” has a corresponding 04-09-2025 15:36:43 ANS152 As Engrossed:

S4/9/25 HB1746 meaning.

3 SECTION 2.

Arkansas Code § 4-1-204 is amended to read as follows:

4-1-204.

Value.

Except as otherwise provided in Chapters 3, 4, and 5, and 12, a person gives value for rights if the person acquires them:

(1) in return for a binding commitment to extend credit or for the extension of immediately available credit, whether or not drawn upon and whether or not a charge-back is provided for in the event of difficulties in collection;

(2) as security for, or in total or partial satisfaction of, a preexisting claim;

(3) by accepting delivery under a preexisting contract for purchase;

or (4) in return for any consideration sufficient to support a simple contract.

SECTION 3.

Arkansas Code § 4-1-301 is amended to read as follows:

4-1-301.

Territorial application of the subtitle — Parties' power to choose applicable law.

(1) Except as provided in this section, when a transaction bears a reasonable relation to this state and also to another state or nation, the parties may agree that the law either of this state or of such other state or nation shall govern their rights and duties.

Failing such agreement this subtitle applies to transactions bearing an appropriate relation to this state.

(2) Where one of the following provisions of this subtitle specifies the applicable law, that provision governs and a contrary agreement is effective only to the extent permitted by the law (including the conflict of laws rules) so specified:

Rights of creditors against sold goods.

Section 4-2-402.

Applicability of the chapter on leases.

Sections 4-2A-105 and 4- 2A-106.

Applicability of the chapter on bank deposits and collections.

Section 4-4-102.

Governing law in the chapter on funds transfers.

Section 4-4A- 04-09-2025 15:36:43 ANS152 As Engrossed:

S4/9/25 HB1746 507.

Letters of Credit.

Section 4-5-116.

Applicability of the chapter on Investment Securities.

Section 4- 8-110.

Law governing perfection, the effect of perfection or non- perfection, and the priority of security interests and agricultural liens.

Sections 4-9-301 through 4-9-307.

Governing law in the chapter on controllable electronic records.

Section 4-12-107.

SECTION 4.

Arkansas Code § 4-1-306 is amended to read as follows:

4-1-306.

Waiver or renunciation of claim or right after breach.

A claim or right arising out of an alleged breach may be discharged in whole or in part without consideration by agreement of the aggrieved party in an authenticated a signed record.

SECTION 5.

Arkansas Code § 4-2-102 is amended to read as follows:

4-2-102.

Scope — Certain security and other transactions excluded from chapter.

(1) Unless the context otherwise requires, and except as provided in subsection (3), this chapter applies to transactions in goods and, in the case of a hybrid transaction, it applies to the extent provided in subsection (2);

it does not apply to any transaction which although in the form of an unconditional contract to sell or present sale is intended to operate only as a security transaction nor does this chapter impair or repeal any statute regulating sales to consumers, farmers or other specified classes of buyers.

(2) In a hybrid transaction:

(a) If the sale-of-goods aspects do not predominate, only the provisions of this chapter which relate primarily to the sale-of-goods aspects of the transaction apply, and the provisions that relate primarily to the transaction as a whole do not apply.

(b) If the sale-of-goods aspects predominate, this chapter applies to the transaction but does not preclude application in appropriate circumstances of other law to aspects of the transaction which do not relate to the sale of goods.

(3) This chapter does not:

04-09-2025 15:36:43 ANS152 As Engrossed:

S4/9/25 HB1746 (a) apply to a transaction that, even though in the form of an unconditional contract to sell or present sale, operates only to create a security interest;

or (b) impair or repeal a statute regulating sales to consumers, farmers, or other specified classes of buyers.

7 SECTION 6.

Arkansas Code § 4-2-106 is amended to read as follows:

4-2-106.

Definitions — “Contract” — “Agreement” — “Contract for sale” — “Sale” — “Present sale” — “Conforming” to contract — “Termination” — “Cancellation” — "Hybrid Transaction".

(1) In this chapter unless the context otherwise requires “contract” and “agreement” are limited to those relating to the present or future sale of goods.

“Contract for sale” includes both a present sale of goods and a contract to sell goods at a future time.

A “sale” consists in the passing of title from the seller to the buyer for a price (§ 4-2-401).

A “present sale” means a sale which is accomplished by the making of the contract.

(2) Goods or conduct including any part of a performance are “conforming” or conform to the contract when they are in accordance with the obligations under the contract.

(3) “Termination” occurs when either party pursuant to a power created by agreement or law puts an end to the contract otherwise than for its breach.

On “termination” all obligations which are still executory on both sides are discharged but any right based on prior breach or performance survives.

(4) “Cancellation” occurs when either party puts an end to the contract for breach by the other and its effect is the same as that of “termination” except that the cancelling party also retains any remedy for breach of the whole contract or any unperformed balance.

(5) “Hybrid transaction” means a single transaction involving a sale of goods and:

(a) the provision of services;

(b) a lease of other goods;

or (c) a sale, lease, or license of property other than goods.

SECTION 7.

Arkansas Code § 4-2-201 is amended to read as follows:

4-2-201.

Formal requirements — Statute of frauds.

04-09-2025 15:36:43 ANS152 As Engrossed:

S4/9/25 HB1746 (1) Except as otherwise provided in this section a contract for the sale of goods for the price of five hundred dollars ($500) or more is not enforceable by way of action or defense unless there is some writing a record sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by his the party's authorized agent or broker.

A writing record is not insufficient because it omits or incorrectly states a term agreed upon but the contract is not enforceable under this paragraph subsection beyond the quantity of goods shown in such writing the record.

(2) Between merchants if within a reasonable time a writing record in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents, it satisfies the requirements of subsection (1) against such the party unless written notice in a record of objection to its contents is given within ten (10) days after it is received.

(3) A contract which does not satisfy the requirements of subsection (1) but which is valid in other respects is enforceable:

(a) if the goods are to be specially manufactured for the buyer and are not suitable for sale to others in the ordinary course of the seller's business and the seller, before notice of repudiation is received and under circumstances which reasonably indicate that the goods are for the buyer, has made either a substantial beginning of their manufacture or commitments for their procurement;

or (b) if the party against whom enforcement is sought admits in his pleading, testimony or otherwise in court that a contract for sale was made, but the contract is not enforceable under this provision beyond the quantity of goods admitted;

or (c) with respect to goods for which payment has been made and accepted or which have been received and accepted (§ 4-2-606).

SECTION 8.

Arkansas Code § 4-2-202 is amended to read as follows:

4-2-202.

Final written expression — Parol or extrinsic evidence.

Terms with respect to which the confirmatory memoranda of the parties agree or which are otherwise set forth in a writing record intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior 04-09-2025 15:36:43 ANS152 As Engrossed:

S4/9/25 HB1746 agreement or of a contemporaneous oral agreement but may be explained or supplemented:

(a) by course of performance, course of dealing, or usage of trade (§ 4-1-303);

and (b) by evidence of consistent additional terms unless the court finds the writing record to have been intended also as a complete and exclusive statement of the terms of the agreement.

9 SECTION 9.

Arkansas Code § 4-2-203 is amended to read as follows:

4-2-203.

Seals inoperative.

The affixing of a seal to a writing record evidencing a contract for sale or an offer to buy or sell goods does not constitute the writing record a sealed instrument and the law with respect to sealed instruments does not apply to such a contract or offer.

SECTION 10.

Arkansas Code § 4-2-205 is amended to read as follows:

4-2-205.

Firm offers.

An offer by a merchant to buy or sell goods in a signed writing record which by its terms gives assurance that it will be held open is not revocable, for lack of consideration, during the time stated or if no time is stated for a reasonable time, but in no event may such period of irrevocability exceed three (3) months;

but any such term of assurance on a form supplied by the offeree must be separately signed by the offeror.

SECTION 11.

Arkansas Code § 4-2-209(2), concerning the modification or rescission of a signed writing under the Uniform Commercial Code, is amended to read as follows:

(2) A signed agreement which excludes modification or rescission except by a signed writing or other signed record cannot be otherwise modified or rescinded, but except as between merchants such a requirement on a form supplied by the merchant must be separately signed by the other party.

SECTION 12.

Arkansas Code § 4-2A-102 is amended to read as follows:

4-2A-102.

Scope.

(1) This chapter applies to any transaction, regardless of form, that creates a lease and, in the case of a hybrid lease, it applies to the extent 04-09-2025 15:36:43 ANS152 As Engrossed:

S4/9/25 HB1746 provided in subsection (2).

(2) In a hybrid lease:

(a) if the lease-of-goods aspects do not predominate:

(i) only the provisions of this chapter which relate primarily to the lease-of-goods aspects of the transaction apply, and the provisions that relate primarily to the transaction as a whole do not apply;

(ii) Section 4-2A-209 applies if the lease is a finance lease;

and (iii) Section 4-2A-407 applies to the promises of the lessee in a finance lease to the extent the promises are consideration for the right to possession and use of the leased goods;

and (b) if the lease-of-goods aspects predominate, this chapter applies to the transaction, but does not preclude application in appropriate circumstances of other law to aspects of the lease which do not relate to the lease of goods.

SECTION 13.

Arkansas Code § 4-2A-103(1), concerning definitions used in the Uniform Commercial Code, is amended to read as follows:

(1) In this chapter unless the context otherwise requires:

(a) “Buyer in ordinary course of business” means a person who in good faith and without knowledge that the sale to him or her is in violation of the ownership rights or security interest or leasehold interest of a third party in the goods, buys in ordinary course from a person in the business of selling goods of that kind but does not include a pawnbroker.

“Buying” may be for cash or by exchange of other property or on secured or unsecured credit and includes acquiring goods or documents of title under a pre-existing contract for sale but does not include a transfer in bulk or as security for or in total or partial satisfaction of a money debt.

(b) “Cancellation” occurs when either party puts an end to the lease contract for default by the other party.

(c) “Commercial unit” means such a unit of goods as by commercial usage is a single whole for purposes of lease and division of which materially impairs its character or value on the market or in use.

A commercial unit may be a single article, as a machine, or a set of articles, as a suite of furniture or a line of machinery, or a quantity, as a gross or carload, or any other unit treated in use or in the relevant market as a 04-09-2025 15:36:43 ANS152 As Engrossed:

S4/9/25 HB1746 single whole.

(d) “Conforming” goods or performance under a lease contract means goods or performance that are in accordance with the obligations under the lease contract.

(e) “Consumer lease” means a lease that a lessor regularly engaged in the business of leasing or selling makes to a lessee who is an individual and who takes under the lease primarily for a personal, family, or household purpose, if the total payments to be made under the lease contract, excluding payments for options to renew or buy, do not exceed twenty-five thousand dollars ($25,000).

(f) “Fault” means wrongful act, omission, breach, or default.

(g) “Finance lease” means a lease with respect to which:

(i) the lessor does not select, manufacture, or supply the goods;

(ii) the lessor acquires the goods or the right to possession and use of the goods in connection with the lease;

and (iii) one of the following occurs:

(A) the lessee receives a copy of the contract by which the lessor acquired the goods or the right to possession and use of the goods before signing the lease contract;

(B) the lessee's approval of the contract by which the lessor acquired the goods or the right to possession and use of the goods is a condition to effectiveness of the lease contract;

(C) the lessee, before signing the lease contract, receives an accurate and complete statement designating the promises and warranties, and any disclaimers of warranties, limitations or modifications of remedies, or liquidated damages, including those of a third party, such as the manufacturer of the goods, provided to the lessor by the person supplying the goods in connection with or as part of the contract by which the lessor acquired the goods or the right to possession and use of the goods;

or (D) if the lease is not a consumer lease, the lessor, before the lessee signs the lease contract, informs the lessee in writing (a) of the identity of the person supplying the goods to the lessor, unless the lessee has selected that person and directed the lessor to acquire the goods or the right to possession and use of the goods from that person, (b) that the lessee is entitled under this chapter to the promises and 04-09-2025 15:36:43 ANS152 As Engrossed:

S4/9/25 HB1746 warranties, including those of any third party, provided to the lessor by the person supplying the goods in connection with or as part of the contract by which the lessor acquired the goods or the right to possession and use of the goods, and (c) that the lessee may communicate with the person supplying the goods to the lessor and receive an accurate and complete statement of those promises and warranties, including any disclaimers and limitations of them or of remedies.

(h) “Goods” means all things that are movable at the time of identification to the lease contract, or are fixtures (§ 4-2A-309), but the term does not include money, documents, instruments, accounts, chattel paper, general intangibles, or minerals or the like, including oil and gas, before extraction.

The term also includes the unborn young of animals.

(h.1) "Hybrid lease" means a single transaction involving a lease of goods and:

(i) the provision of services;

(ii) a sale of other goods;

or (iii) a sale, lease, or license of property other than goods.

(i) “Installment lease contract” means a lease contract that authorizes or requires the delivery of goods in separate lots to be separately accepted, even though the lease contract contains a clause “each delivery is a separate lease” or its equivalent.

(j) “Lease” means a transfer of the right to possession and use of goods for a term in return for consideration, but a sale, including a sale on approval or a sale or return, or retention or creation of a security interest is not a lease.

Unless the context clearly indicates otherwise, the term includes a sublease.

(k) “Lease agreement” means the bargain, with respect to the lease, of the lessor and the lessee in fact as found in their language or by implication from other circumstances including course of dealing or usage of trade or course of performance as provided in this chapter.

Unless the context clearly indicates otherwise, the term includes a sublease agreement.

(l) “Lease contract” means the total legal obligation that results from the lease agreement as affected by this chapter and any other applicable rules of law.

Unless the context clearly indicates otherwise, the term includes a sublease contract.

04-09-2025 15:36:43 ANS152 As Engrossed:

S4/9/25 HB1746 (m) “Leasehold interest” means the interest of the lessor or the lessee under a lease contract.

(n) “Lessee” means a person who acquires the right to possession and use of goods under a lease.

Unless the context clearly indicates otherwise, the term includes a sublessee.

(o) “Lessee in ordinary course of business” means a person who in good faith and without knowledge that the lease to him or her is in violation of the ownership rights or security interest or leasehold interest of a third party in the goods, leases in ordinary course from a person in the business of selling or leasing goods of that kind but does not include a pawnbroker.

“Leasing” may be for cash or by exchange of other property or on secured or unsecured credit and includes acquiring goods or documents of title under a pre-existing lease contract but does not include a transfer in bulk or as security for or in total or partial satisfaction of a money debt.

(p) “Lessor” means a person who transfers the right to possession and use of goods under a lease.

Unless the context clearly indicates otherwise, the term includes a sublessor.

(q) “Lessor's residual interest” means the lessor's interest in the goods after expiration, termination, or cancellation of the lease contract.

(r) “Lien” means a charge against or interest in goods to secure payment of a debt or performance of an obligation, but the term does not include a security interest.

(s) “Lot” means a parcel or a single article that is the subject matter of a separate lease or delivery, whether or not it is sufficient to perform the lease contract.

(t) “Merchant lessee” means a lessee that is a merchant with respect to goods of the kind subject to the lease.

(u) “Present value” means the amount as of a date certain of one or more sums payable in the future, discounted to the date certain.

The discount is determined by the interest rate specified by the parties if the rate was not manifestly unreasonable at the time the transaction was entered into;

otherwise, the discount is determined by a commercially reasonable rate that takes into account the facts and circumstances of each case at the time the transaction was entered into.

(v) “Purchase” includes taking by sale, lease, mortgage, 04-09-2025 15:36:43 ANS152 As Engrossed:

S4/9/25 HB1746 security interest, pledge, gift, or any other voluntary transaction creating an interest in goods.

(w) “Sublease” means a lease of goods the right to possession and use of which was acquired by the lessor as a lessee under an existing lease.

(x) “Supplier” means a person from whom a lessor buys or leases goods to be leased under a finance lease.

(y) “Supply contract” means a contract under which a lessor buys or leases goods to be leased.

(z) “Termination” occurs when either party pursuant to a power created by agreement or law puts an end to the lease contract otherwise than for default.

SECTION 14.

Arkansas Code § 4-2A-107 is amended to read as follows:

4-2A-107.

Waiver or renunciation of claim or right after default.

Any claim or right arising out of an alleged default or breach of warranty may be discharged in whole or in part without consideration by a written waiver or renunciation in a signed and record delivered by the aggrieved party.

SECTION 15.

Arkansas Code § 4-2A-201 is amended to read as follows:

4-2A-201.

Statute of frauds.

(1) A lease contract is not enforceable by way of action or defense unless:

(a) the total payments to be made under the lease contract, excluding payments for options to renew or buy, are less than one thousand dollars ($1,000);

or (b) there is a writing record, signed by the party against whom enforcement is sought or by that party's authorized agent, sufficient to indicate that a lease contract has been made between the parties and to describe the goods leased and the lease term.

(2) Any description of leased goods or of the lease term is sufficient and satisfies subsection (1)(b), whether or not it is specific, if it reasonably identifies what is described.

(3) A writing record is not insufficient because it omits or incorrectly states a term agreed upon, but the lease contract is not 04-09-2025 15:36:43 ANS152 As Engrossed:

S4/9/25 HB1746 enforceable under subsection (1)(b) beyond the lease term and the quantity of goods shown in the writing record.

(4) A lease contract that does not satisfy the requirements of subsection (1), but which is valid in other respects, is enforceable:

(a) if the goods are to be specially manufactured or obtained for the lessee and are not suitable for lease or sale to others in the ordinary course of the lessor's business, and the lessor, before notice of repudiation is received and under circumstances that reasonably indicate that the goods are for the lessee, has made either a substantial beginning of their manufacture or commitments for their procurement;

(b) if the party against whom enforcement is sought admits in that party's pleading, testimony or otherwise in court that a lease contract was made, but the lease contract is not enforceable under this provision beyond the quantity of goods admitted;

or (c) with respect to goods that have been received and accepted by the lessee.

(5) The lease term under a lease contract referred to in subsection (4) is:

(a) if there is a writing record signed by the party against whom enforcement is sought or by that party's authorized agent specifying the lease term, the term so specified;

(b) if the party against whom enforcement is sought admits in that party's pleading, testimony, or otherwise in court a lease term, the term so admitted;

or (c) a reasonable lease term.

SECTION 16.

Arkansas Code § 4-2A-202 is amended to read as follows:

4-2A-202.

Final written expression — Parol or extrinsic evidence.

Terms with respect to which the confirmatory memoranda of the parties agree or which are otherwise set forth in a writing record intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement but may be explained or supplemented:

(a) by course of dealing or usage of trade or by course of performance;

and 04-09-2025 15:36:43 ANS152 As Engrossed:

S4/9/25 HB1746 (b) by evidence of consistent additional terms unless the court finds the writing record to have been intended also as a complete and exclusive statement of the terms of the agreement.

5 SECTION 17.

Arkansas Code § 4-2A-203 is amended to read as follows:

4-2A-203.

Seals inoperative.

The affixing of a seal to a writing record evidencing a lease contract or an offer to enter into a lease contract does not render the writing record a sealed instrument and the law with respect to sealed instruments does not apply to the lease contract or offer.

SECTION 18.

Arkansas Code § 4-2A-205 is amended to read as follows:

4-2A-205.

Firm offers.

An offer by a merchant to lease goods to or from another person in a signed writing record that by its terms gives assurance it will be held open is not revocable, for lack of consideration, during the time stated or, if no time is stated, for a reasonable time, but in no event may the period of irrevocability exceed three (3) months.

Any such term of assurance on a form supplied by the offeree must be separately signed by the offeror.

SECTION 19.

Arkansas Code § 4-2A-208(2), concerning the modification or rescission of a signed writing under the Uniform Commercial Code, is amended to read as follows:

(2) A signed lease agreement that excludes modification or rescission except by a signed writing record may not be otherwise modified or rescinded, but, except as between merchants, such a requirement on a form supplied by a merchant must be separately signed by the other party.

SECTION 20.

Arkansas Code § 4-3-104(a), concerning the definition of "negotiable instrument" used in the Uniform Commercial Code, is amended to read as follows:

(a) Except as provided in subsections (c) and (d), “negotiable instrument” means an unconditional promise or order to pay a fixed amount of money, with or without interest or other charges described in the promise or order, if it:

(1) is payable to bearer or to order at the time it is issued or 04-09-2025 15:36:43 ANS152 As Engrossed:

S4/9/25 HB1746 first comes into possession of a holder;

(2) is payable on demand or at a definite time;

and (3) does not state any other undertaking or instruction by the person promising or ordering payment to do any act in addition to the payment of money, but the promise or order may contain (i) an undertaking or power to give, maintain, or protect collateral to secure payment, (ii) an authorization or power to the holder to confess judgment or realize on or dispose of collateral, or (iii) a waiver of the benefit of any law intended for the advantage or protection of an obligor, (iv) a term that specifies the law that governs the promise or order, or (v) an undertaking to resolve in a specified forum a dispute concerning the promise or order.

SECTION 21.

Arkansas Code § 4-3-105(a), concerning the definition of "issue" used in the Uniform Commercial Code, is amended to read as follows:

(a) “Issue” means:

(1) the first delivery of an instrument by the maker or drawer, whether to a holder or nonholder, for the purpose of giving rights on the instrument to any person;

or (2) if agreed by the payee, the first transmission by the drawer to the payee of an image of an item and information derived from the item that enables the depositary bank to collect the item by transferring or presenting under federal law an electronic check.

SECTION 22.

Arkansas Code § 4-3-401 is amended to read as follows:

4-3-401.

Signature necessary for liability on instrument.

(a) A person is not liable on an instrument unless (i) the person signed the instrument, or (ii) the person is represented by an agent or representative who signed the instrument and the signature is binding on the represented person under § 4-3-402.

(b) A signature may be made (i) manually or by means of a device or machine, and (ii) by the use of any name, including a trade or assumed name, or by a word, mark, or symbol executed or adopted by a person with present intention to authenticate a writing.

SECTION 23.

Arkansas Code § 4-3-604 is amended to read as follows:

4-3-604.

Discharge by cancellation or renunciation.

04-09-2025 15:36:43 ANS152 As Engrossed:

S4/9/25 HB1746 (a) A person entitled to enforce an instrument, with or without consideration, may discharge the obligation of a party to pay the instrument (i) by an intentional voluntary act, such as surrender of the instrument to the party, destruction, mutilation, or cancellation of the instrument, cancellation or striking out of the party's signature, or the addition of words to the instrument indicating discharge, or (ii) by agreeing not to sue or otherwise renouncing rights against the party by a signed record.

The obligation of a party to pay a check is not discharged solely by destruction of the check in connection with a process in which information is extracted from the check and an image of the check is made and, subsequently, the information and image are transmitted for payment.

(b) Cancellation or striking out of an indorsement pursuant to subsection (a) does not affect the status and rights of a party derived from the indorsement.

(c) In this section, “signed,” with respect to a record that is not a writing, includes the attachment to or logical association with the record of an electronic symbol, sound, or process with the present intent to adopt or accept the record.

SECTION 24.

Arkansas Code § 4-4A-103(a)(1), concerning the definition of "payment order" used in the Uniform Commercial Code, is amended to read as follows:

(1) “Payment order” means an instruction of a sender to a receiving bank, transmitted orally, electronically, or in writing or in a record, to pay, or to cause another bank to pay, a fixed or determinable amount of money to a beneficiary if:

(i) the instruction does not state a condition to payment to the beneficiary other than time of payment, (ii) the receiving bank is to be reimbursed by debiting an account of, or otherwise receiving payment from, the sender, and (iii) the instruction is transmitted by the sender directly to the receiving bank or to an agent, funds-transfer system, or communication system for transmittal to the receiving bank.

SECTION 25.

Arkansas Code § 4-4A-201 is amended to read as follows:

4-4A-201.

Security procedure.

04-09-2025 15:36:43 ANS152 As Engrossed:

S4/9/25 HB1746 “Security procedure” means a procedure established by agreement of a customer and a receiving bank for the purpose of (i) verifying that a payment order or communication amending or cancelling a payment order is that of the customer, or (ii) detecting error in the transmission or the content of the payment order or communication.

A security procedure may impose an obligation on the receiving bank or the customer and may require the use of algorithms or other codes, identifying words, or numbers, symbols, sounds, biometrics, encryption, callback procedures, or similar security devices.

Comparison of a signature on a payment order or communication with an authorized specimen signature of the customer or requiring a payment order to be sent from a known email address, IP address, or telephone number is not by itself a security procedure.

SECTION 26.

Arkansas Code § 4-4A-202(b), concerning the verification and authenticity of payment orders under the Uniform Commercial Code, is amended to read as follows:

(b) If a bank and its customer have agreed that the authenticity of payment orders issued to the bank in the name of the customer as sender will be verified pursuant to a security procedure, a payment order received by the receiving bank is effective as the order of the customer, whether or not authorized, if (i) the security procedure is a commercially reasonable method of providing security against unauthorized payment orders, and (ii) the bank proves that it accepted the payment order in good faith and in compliance with the bank's obligations under the security procedure and any written agreement or instruction of the customer, evidenced by a record, restricting acceptance of payment orders issued in the name of the customer.

The bank is not required to follow an instruction that violates a written an agreement with the customer, evidenced by a record, or notice of which is not received at a time and in a manner affording the bank a reasonable opportunity to act on it before the payment order is accepted.

SECTION 27.

Arkansas Code § 4-4A-202(c), concerning the commercial reasonableness of the security procedure used to verify the authenticity of a payment order under the Uniform Commercial Code, is amended to read as follows:

(c) Commercial reasonableness of a security procedure is a question of 04-09-2025 15:36:43 ANS152 As Engrossed:

S4/9/25 HB1746 law to be determined by considering the wishes of the customer expressed to the bank, the circumstances of the customer known to the bank, including the size, type, and frequency of payment orders normally issued by the customer to the bank, alternative security procedures offered to the customer, and security procedures in general use by customers and receiving banks similarly situated.

A security procedure is deemed to be commercially reasonable if (i) the security procedure was chosen by the customer after the bank offered, and the customer refused, a security procedure that was commercially reasonable for that customer, and (ii) the customer expressly agreed in writing a record to be bound by any payment order, whether or not authorized, issued in its name and accepted by the bank in compliance with the bank's obligations under the security procedure chosen by the customer.

SECTION 28.

Arkansas Code § 4-4A-203(a)(1), concerning the unenforceability of certain payment orders under the Uniform Commercial Code, is amended to read as follows:

(1) By express written agreement evidenced by a record, the receiving bank may limit the extent to which it is entitled to enforce or retain payment of the payment order.

SECTION 29.

Arkansas Code § 4-4A-207(c)(2), concerning the rules applicable for misdescription of a beneficiary of a payment order under the Uniform Commercial Code, is amended to read as follows:

(2) If the originator is not a bank and proves that the person identified by number was not entitled to receive payment from the originator, the originator is not obliged to pay its order unless the originator's bank proves that the originator, before acceptance of the originator's order, had notice that payment of a payment order issued by the originator might be made by the beneficiary's bank on the basis of an identifying or bank account number even if it identifies a person different from the named beneficiary.

Proof of notice may be made by any admissible evidence.

The originator's bank satisfies the burden of proof if it proves that the originator, before the payment order was accepted, signed a writing record stating the information to which the notice relates.

SECTION 30.

Arkansas Code § 4-4A-208(b)(2), concerning the 04-09-2025 15:36:43 ANS152 As Engrossed:

S4/9/25 HB1746 misdescription of an intermediary bank or beneficiary's bank in a payment order under the Uniform Commercial Code, is amended to read as follows:

(2) If the sender is not a bank and the receiving bank proves that the sender, before the payment order was accepted, had notice that the receiving bank might rely on the number as the proper identification of the intermediary or beneficiary's bank even if it identifies a person different from the bank identified by name, the rights and obligations of the sender and the receiving bank are governed by subsection (b)(1), as though the sender were a bank.

Proof of notice may be made by any admissible evidence.

The receiving bank satisfies the burden of proof if it proves that the sender, before the payment order was accepted, signed a writing record stating the information to which the notice relates.

SECTION 31.

Arkansas Code § 4-4A-210(a), concerning the rejection of a payment order under the Uniform Commercial Code, is amended to read as follows:

(a) A payment order is rejected by the receiving bank by a notice of rejection transmitted to the sender orally, electronically, or in writing a record.

A notice of rejection need not use any particular words and is sufficient if it indicates that the receiving bank is rejecting the order or will not execute or pay the order.

Rejection is effective when the notice is given if transmission is by a means that is reasonable in the circumstances.

If notice of rejection is given by a means that is not reasonable, rejection is effective when the notice is received.

If an agreement of the sender and receiving bank establishes the means to be used to reject a payment order, (i) any means complying with the agreement is reasonable and (ii) any means not complying is not reasonable unless no significant delay in receipt of the notice resulted from the use of the noncomplying means.

SECTION 32.

Arkansas Code § 4-4A-211(a), concerning the cancellation and amendment of a payment order under the Uniform Commercial Code, is amended to read as follows:

(a) A communication of the sender of a payment order cancelling or amending the order may be transmitted to the receiving bank orally, electronically, or in writing a record.

If a security procedure is in effect between the sender and the receiving bank, the communication is not effective 04-09-2025 15:36:43 ANS152 As Engrossed:

S4/9/25 HB1746 to cancel or amend the order unless the communication is verified pursuant to the security procedure or the bank agrees to the cancellation or amendment.

4 SECTION 33.

Arkansas Code § 4-4A-305(c) and (d), concerning the liability of consequential damages for late or improper execution or failure to execute a payment order under the Uniform Commercial Code, are amended to read as follows:

(c) In addition to the amounts payable under subsections (a) and (b), damages, including consequential damages, are recoverable to the extent provided in an express written agreement of the receiving bank, evidenced by a record.

(d) If a receiving bank fails to execute a payment order it was obliged by express agreement to execute, the receiving bank is liable to the sender for its expenses in the transaction and for incidental expenses and interest losses resulting from the failure to execute.

Additional damages, including consequential damages, are recoverable to the extent provided in an express written agreement of the receiving bank, evidenced by a record, but are not otherwise recoverable.

SECTION 34.

Arkansas Code § 4-5-104 is amended to read as follows:

4-5-104.

Formal requirements.

A letter of credit, confirmation, advice, transfer, amendment, or cancellation may be issued in any form that is a signed record and is authenticated (i) by a signature or (ii) in accordance with the agreement of the parties or the standard practice referred to in § 4-5-108(e).

SECTION 35.

Arkansas Code § 4-5-116 is amended to read as follows:

4-5-116.

Choice of law and forum.

(a) The liability of an issuer, nominated person, or adviser for action or omission is governed by the law of the jurisdiction chosen by an agreement in the form of a record signed or otherwise authenticated by the affected parties in the manner provided in § 4-5-104 or by a provision in the person's letter of credit, confirmation, or other undertaking.

The jurisdiction whose law is chosen need not bear any relation to the transaction.

(b) Unless subsection (a) of this section applies, the liability of an 04-09-2025 15:36:43 ANS152 As Engrossed:

S4/9/25 HB1746 issuer, nominated person, or adviser for action or omission is governed by the law of the jurisdiction in which the person is located.

The person is considered to be located at the address indicated in the person's undertaking.

If more than one (1) address is indicated, the person is considered to be located at the address from which the person's undertaking was issued.

(c) For the purpose of jurisdiction, choice of law, and recognition of interbranch letters of credit, but not enforcement of a judgment, all branches of a bank are considered separate juridical entities and a bank is considered to be located at the place where its relevant branch is considered to be located under this subsection (d).

(d) A branch of a bank is considered to be located at the address indicated in the branch's undertaking.

If more than one address is indicated, the branch is considered to be located at the address from which the undertaking was issued.

(c)(e) Except as otherwise provided in this subsection, the liability of an issuer, nominated person, or adviser is governed by any rules of custom or practice, such as the Uniform Customs and Practice for Documentary Credits, to which the letter of credit, confirmation, or other undertaking is expressly made subject.

If (i) this chapter would govern the liability of an issuer, nominated person, or adviser under subsection (a) or (b) of this section, (ii) the relevant undertaking incorporates rules of custom or practice, and (iii) there is conflict between this chapter and those rules as applied to that undertaking, those rules govern except to the extent of any conflict with the nonvariable provisions specified in § 4-5-103(c).

(d)(f) If there is conflict between this chapter and Chapter 3, 4, 4A, or 9, this chapter governs.

(e)(g) The forum for settling disputes arising out of an undertaking within this chapter may be chosen in the manner and with the binding effect that governing law may be chosen in accordance with subsection (a) of this section.

SECTION 36.

Arkansas Code § 4-7-102(a)(12), concerning the definition of "sign" in the Uniform Commercial Code, is amended to read as follows:

(12) “Sign” means, with present intent to authenticate or adopt a record:

04-09-2025 15:36:43 ANS152 As Engrossed:

S4/9/25 HB1746 (A) to execute or adopt a tangible symbol;

or (B) to attach to or logically associate with the record an electronic sound, symbol, or process.

[Reserved.] 5 SECTION 37.

Arkansas Code § 4-7-106 is amended to read as follows:

4-7-106.

Control of electronic document of title.

(a) 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.

(b) A system satisfies subsection (a), and a person is deemed to have has control of an electronic document of title, if the document is created, stored, and assigned transferred in such a manner that:

(1) a single authoritative copy of the document exists which is unique, identifiable, and, except as otherwise provided in paragraphs (4), (5), and (6), unalterable;

(2) the authoritative copy identifies the person asserting control as:

(A) the person to which the document was issued;

or (B) if the authoritative copy indicates that the document has been transferred, the person to which the document was most recently transferred;

(3) the authoritative copy is communicated to and maintained by the person asserting control or its designated custodian;

(4) copies or amendments that add or change an identified assignee transferee of the authoritative copy can be made only with the consent of the person asserting control;

(5) 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 (6) any amendment of the authoritative copy is readily identifiable as authorized or unauthorized.

(c) A system satisfies subsection (a), 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:

(1) enables the person readily to identify each electronic copy 04-09-2025 15:36:43 ANS152 As Engrossed:

S4/9/25 HB1746 as either an authoritative copy or a nonauthoritative copy;

(2) enables the person readily to 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 (3) gives the person exclusive power, subject to subsection (d), to:

(A) prevent others from adding or changing the person to which each authoritative electronic copy has been issued or transferred;

and (B) transfer control of each authoritative electronic copy.

(d) Subject to subsection (e), a power is exclusive under subsection (c)(3)(A) and (B) even if:

(1) 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 (2) the power is shared with another person.

(e) A power of a person is not shared with another person under subsection (d)(2) and the person’s power is not exclusive if:

(1) the person can exercise the power only if the power also is exercised by the other person;

and (2) the other person:

(A) can exercise the power without exercise of the power by the person;

or (B) is the transferor to the person of an interest in the document of title.

(f) If a person has the powers specified in subsection (c)(3)(A) and (B), the powers are presumed to be exclusive.

(g) 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:

(1) has control of the document and acknowledges that it has control on behalf of the person;

or (2) obtains control of the document after having acknowledged 04-09-2025 15:36:43 ANS152 As Engrossed:

S4/9/25 HB1746 that it will obtain control of the document on behalf of the person.

(h) A person that has control under this section is not required to acknowledge that it has control on behalf of another person.

(i) 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 chapter or Chapter 9 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.

SECTION 38.

Arkansas Code § 4-8-102(a)(6), concerning the definition of "communicate" in the Uniform Commercial Code, is amended to read as follows:

(6) “Communicate” means to:

(i) send a signed writing record;

or (ii) transmit information by any mechanism agreed upon by the persons transmitting and receiving the information.

SECTION 39.

Arkansas Code § 4-8-102(b), concerning definitions used in the Uniform Commercial Code, is amended to read as follows:

(b) Other The following definitions applying to in this chapter and the sections in which they appear are other chapters apply to this chapter:

Appropriate person § 4-8-107 Control § 4-8-106 Controllable account § 4-9-102 Controllable electronic record § 4-12-102 Controllable payment intangible § 4-9-102 Delivery § 4-8-301 Investment company security § 4-8-103 Issuer § 4-8-201 Overissue § 4-8-210 Protected purchaser § 4-8-303 Securities account § 4-8-501 SECTION 40.

Arkansas Code § 4-8-103, concerning the rules for determining whether certain obligations and interests are securities or financial assets in the Uniform Commercial Code, is amended to add an 04-09-2025 15:36:43 ANS152 As Engrossed:

S4/9/25 HB1746 additional subsection to read as follows:

(h) A controllable account, controllable electronic record, or controllable payment intangible is not a financial asset unless § 4-8- 102(a)(9)(iii) applies.

6 SECTION 41.

Arkansas Code § 4-8-106(d), concerning control of a security entitlement by a purchaser under the Uniform Commercial Code, is amended to read as follows:

(d) A purchaser has “control” of a security entitlement if:

(1) the purchaser becomes the entitlement holder;

(2) the securities intermediary has agreed that it will comply with entitlement orders originated by the purchaser without further consent by the entitlement holder;

or (3) another person, has control of the security entitlement on behalf of the purchaser or, having previously acquired control of the security entitlement, acknowledges that it has control on behalf of the purchaser other than the transferor to the purchaser of an interest in the security entitlement:

(A) has control of the security entitlement and acknowledges that it has control on behalf of the purchaser;

or (B) obtains control of the security entitlement after having acknowledged that it will obtain control of the security entitlement on behalf of the purchaser.

SECTION 42.

Arkansas Code § 4-8-106, concerning control under the Uniform Commercial Code, is amended to add additional subsections to read as follows:

(h) A person that has control under this section is not required to acknowledge that it has control on behalf of a purchaser.

(i) If a person acknowledges that it has or will obtain control on behalf of a purchaser, unless the person otherwise agrees or law other than this chapter or Chapter 9 otherwise provides, the person does not owe any duty to the purchaser and is not required to confirm the acknowledgment to any other person.

SECTION 43.

Arkansas Code § 4-8-110, concerning the applicability of 04-09-2025 15:36:43 ANS152 As Engrossed:

S4/9/25 HB1746 the Uniform Commercial Code and choice of law under the Uniform Commercial Code, is amended to add an additional subsection to read as follows:

(g) The local law of the issuer’s jurisdiction or the securities intermediary’s jurisdiction governs a matter or transaction specified in subsection (a) or (b) even if the matter or transaction does not bear any relation to the jurisdiction.

8 SECTION 44.

Arkansas Code § 4-8-303(b), concerning a protected purchaser under the Uniform Commercial Code, is amended to read as follows:

(b) In addition to acquiring the rights of a purchaser, a A protected purchaser also acquires its interest in the security free of any adverse claim.

SECTION 45.

Arkansas Code § 4-9-102 is amended to read as follows:

4-9-102.

Definitions and index of definitions.

(a) In this chapter:

(1) “Accession” means goods that are physically united with other goods in such a manner that the identity of the original goods is not lost.

(2) “Account”, except as used in “account for”, "account statement", "account to", "commodity account" in paragraph (14), "customer's account", "deposit account" in paragraph (29), "on account of", and "statement of account", means a right to payment of a monetary obligation, whether or not earned by performance, (i) for property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, (ii) for services rendered or to be rendered, (iii) for a policy of insurance issued or to be issued, (iv) for a secondary obligation incurred or to be incurred, (v) for energy provided or to be provided, (vi) for the use or hire of a vessel under a charter or other contract, (vii) arising out of the use of a credit or charge card or information contained on or for use with the card, or (viii) as winnings in a lottery or other game of chance operated or sponsored by a state, governmental unit of a state, or person licensed or authorized to operate the game by a state or governmental unit of a state.

The term includes controllable accounts and health-care-insurance receivables.

The term does not include (i) rights to payment evidenced by chattel paper or an instrument chattel paper, (ii) commercial tort claims, 04-09-2025 15:36:43 ANS152 As Engrossed:

S4/9/25 HB1746 (iii) deposit accounts, (iv) investment property, (v) letter-of-credit rights or letters of credit, or (vi) rights to payment for money or funds advanced or sold, other than rights arising out of the use of a credit or charge card or information contained on or for use with the card, or (vii) rights to payment evidenced by an instrument.

(3) “Account debtor” means a person obligated on an account, chattel paper, or general intangible.

The term does not include persons obligated to pay a negotiable instrument, even if the negotiable instrument constitutes part of evidences chattel paper.

(4) “Accounting”, except as used in “accounting for”, means a record:

(A) authenticated signed by a secured party;

(B) indicating the aggregate unpaid secured obligations as of a date not more than thirty-five (35) days earlier or thirty-five (35) days later than the date of the record;

and (C) identifying the components of the obligations in reasonable detail.

(5) “Agricultural lien” means an interest, other than a security interest or a landlord's lien under § 18-41-101 or § 18-41-103, in farm products: