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Office of the Revisor of Statutes

Key: (1) language to be deleted (2) new language

                             CHAPTER 11-H.F.No. 441 
                  An act relating to commerce; enacting the revised 
                  article 5 of the Uniform Commercial Code; regulating 
                  letters of credit; making conforming changes; amending 
                  Minnesota Statutes 1996, sections 336.1-105; 
                  336.2-512; 336.9-103; 336.9-104; 336.9-105; 336.9-106; 
                  336.9-304; and 336.9-305; proposing coding for new law 
                  in Minnesota Statutes, chapter 336; repealing 
                  Minnesota Statutes 1996, sections 336.5-101; 
                  336.5-102; 336.5-103; 336.5-104; 336.5-105; 336.5-106; 
                  336.5-107; 336.5-108; 336.5-109; 336.5-110; 336.5-111; 
                  336.5-112; 336.5-113; 336.5-114; 336.5-115; 336.5-116; 
                  and 336.5-117. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
                                   ARTICLE 1 
                            UNIFORM COMMERCIAL CODE 
                               Revised Article 5 
                               LETTERS OF CREDIT 
           Section 1.  [336.5-101] [SHORT TITLE.] 
           This article may be cited as Uniform Commercial 
        Code-Letters of Credit. 
           Sec. 2.  [336.5-102] [DEFINITIONS.] 
           (a) In this article: 
           (1) "Adviser" means a person who, at the request of the 
        issuer, a confirmer, or another adviser, notifies or requests 
        another adviser to notify the beneficiary that a letter of 
        credit has been issued, confirmed, or amended. 
           (2) "Applicant" means a person at whose request or for 
        whose account a letter of credit is issued.  The term includes a 
        person who requests an issuer to issue a letter of credit on 
        behalf of another if the person making the request undertakes an 
        obligation to reimburse the issuer. 
           (3) "Beneficiary" means a person who under the terms of a 
        letter of credit is entitled to have its complying presentation 
        honored.  The term includes a person to whom drawing rights have 
        been transferred under a transferable letter of credit. 
           (4) "Confirmer" means a nominated person who undertakes, at 
        the request or with the consent of the issuer, to honor a 
        presentation under a letter of credit issued by another. 
           (5) "Dishonor" of a letter of credit means failure timely 
        to honor or to take an interim action, such as acceptance of a 
        draft, that may be required by the letter of credit. 
           (6) "Document" means a draft or other demand, document of 
        title, investment security, certificate, invoice, or other 
        record, statement, or representation of fact, law, right, or 
        opinion (i) which is presented in a written or other medium 
        permitted by the letter of credit or, unless prohibited by the 
        letter of credit, by the standard practice referred to in 
        section 336.5-108, paragraph (e) and (ii) which is capable of 
        being examined for compliance with the terms and conditions of 
        the letter of credit.  A document may not be oral. 
           (7) "Good faith" means honesty in fact in the conduct or 
        transaction concerned. 
           (8) "Honor" of a letter of credit means performance of the 
        issuer's undertaking in the letter of credit to pay or deliver 
        an item of value.  Unless the letter of credit otherwise 
        provides, "honor" occurs 
           (i) upon payment, 
           (ii) if the letter of credit provides for acceptance, upon 
        acceptance of a draft and, at maturity, its payment, or 
           (iii) if the letter of credit provides for incurring a 
        deferred obligation, upon incurring the obligation and, at 
        maturity, its performance. 
           (9) "Issuer" means a bank or other person that issues a 
        letter of credit, but does not include an individual who makes 
        an engagement for personal, family, or household purposes. 
           (10) "Letter of credit" means a definite undertaking that 
        satisfies the requirements of section 336.5-104 by an issuer to 
        a beneficiary at the request or for the account of an applicant 
        or, in the case of a financial institution, to itself or for its 
        own account, to honor a documentary presentation by payment or 
        delivery of an item of value. 
           (11) "Nominated person" means a person whom the issuer (i) 
        designates or authorizes to pay, accept, negotiate, or otherwise 
        give value under a letter of credit and (ii) undertakes by 
        agreement or custom and practice to reimburse. 
           (12) "Presentation" means delivery of a document to an 
        issuer or nominated person for honor or giving of value under a 
        letter of credit. 
           (13) "Presenter" means a person making a presentation as or 
        on behalf of a beneficiary or nominated person. 
           (14) "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. 
           (15) "Successor of a beneficiary" means a person who 
        succeeds to substantially all of the rights of a beneficiary by 
        operation of law, including a corporation with or into which the 
        beneficiary has been merged or consolidated, an administrator, 
        executor, personal representative, trustee in bankruptcy, debtor 
        in possession, liquidator, and receiver. 
           (b) Definitions in other articles applying to this article 
        and the sections in which they appear are: 
           "Accept" or "Acceptance"  Section 336.3-409 
           "Value"  Sections 336.3-303, 336.4-211 
           (c) Article 1 contains certain additional general 
        definitions and principles of construction and interpretation 
        applicable throughout this article. 
           Sec. 3.  [336.5-103] [SCOPE.] 
           (a) This article applies to letters of credit and to 
        certain rights and obligations arising out of transactions 
        involving letters of credit. 
           (b) The statement of a rule in this article does not by 
        itself require, imply, or negate application of the same or a 
        different rule to a situation not provided for, or to a person 
        not specified, in this article. 
           (c) With the exception of this subsection, subsections (a) 
        and (d), sections 336.5-102(a)(9) and (10), 336.5-106(d), and 
        336.5-114(d), and except to the extent prohibited in sections 
        336.1-102(3) and 336.5-117(d), the effect of this article may be 
        varied by agreement or by a provision stated or incorporated by 
        reference in an undertaking.  A term in an agreement or 
        undertaking generally excusing liability or generally limiting 
        remedies for failure to perform obligations is not sufficient to 
        vary obligations prescribed by this article. 
           (d) Rights and obligations of an issuer to a beneficiary or 
        a nominated person under a letter of credit are independent of 
        the existence, performance, or nonperformance of a contract or 
        arrangement out of which the letter of credit arises or which 
        underlies it, including contracts or arrangements between the 
        issuer and the applicant and between the applicant and the 
        beneficiary. 
           Sec. 4.  [336.5-104] [FORMAL REQUIREMENTS.] 
           A letter of credit, confirmation, advice, transfer, 
        amendment, or cancellation may be issued in any form that is a 
        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 section 336.5-108(e). 
           Sec. 5.  [336.5-105] [CONSIDERATION.] 
           Consideration is not required to issue, amend, transfer, or 
        cancel a letter of credit, advice, or confirmation. 
           Sec. 6.  [336.5-106] [ISSUANCE, AMENDMENT, CANCELLATION, 
        AND DURATION.] 
           (a) A letter of credit is issued and becomes enforceable 
        according to its terms against the issuer when the issuer sends 
        or otherwise transmits it to the person requested to advise or 
        to the beneficiary.  A letter of credit is revocable only if it 
        so provides. 
           (b) After a letter of credit is issued, rights and 
        obligations of a beneficiary, applicant, confirmer, and issuer 
        are not affected by an amendment or cancellation to which that 
        person has not consented except to the extent the letter of 
        credit provides that it is revocable or that the issuer may 
        amend or cancel the letter of credit without that consent. 
           (c) If there is no stated expiration date or other 
        provision that determines its duration, a letter of credit 
        expires one year after its stated date of issuance or, if none 
        is stated, after the date on which it is issued. 
           (d) A letter of credit that states that it is perpetual 
        expires five years after its stated date of issuance, or if none 
        is stated, after the date on which it is issued.  
           Sec. 7.  [336.5-107] [CONFIRMER, NOMINATED PERSON, AND 
        ADVISER.] 
           (a) A confirmer is directly obligated on a letter of credit 
        and has the rights and obligations of an issuer to the extent of 
        its confirmation.  The confirmer also has rights against and 
        obligations to the issuer as if the issuer were an applicant and 
        the confirmer had issued the letter of credit at the request and 
        for the account of the issuer. 
           (b) A nominated person who is not a confirmer is not 
        obligated to honor or otherwise give value for a presentation. 
           (c) A person requested to advise may decline to act as an 
        adviser.  An adviser that is not a confirmer is not obligated to 
        honor or give value for a presentation.  An adviser undertakes 
        to the issuer and to the beneficiary accurately to advise the 
        terms of the letter of credit, confirmation, amendment, or 
        advice received by that person and undertakes to the beneficiary 
        to check the apparent authenticity of the request to advise.  
        Even if the advice is inaccurate, the letter of credit, 
        confirmation, or amendment is enforceable as issued. 
           (d) A person who notifies a transferee beneficiary of the 
        terms of a letter of credit, confirmation, amendment, or advice 
        has the rights and obligations of an adviser under subsection 
        (c).  The terms in the notice to the transferee beneficiary may 
        differ from the terms in any notice to the transferor 
        beneficiary to the extent permitted by the letter of credit, 
        confirmation, amendment, or advice received by the person who so 
        notifies. 
           Sec. 8.  [336.5-108] [ISSUER'S RIGHTS AND OBLIGATIONS.] 
           (a) Except as otherwise provided in section 336.5-109, an 
        issuer shall honor a presentation that, as determined by the 
        standard practice referred to in subsection (e), appears on its 
        face strictly to comply with the terms and conditions of the 
        letter of credit.  Except as otherwise provided in section 
        336.5-113 and unless otherwise agreed with the applicant, an 
        issuer shall dishonor a presentation that does not appear so to 
        comply. 
           (b) An issuer has a reasonable time after presentation, but 
        not beyond the end of the seventh business day of the issuer 
        after the day of its receipt of documents: 
           (1) to honor, 
           (2) if the letter of credit provides for honor to be 
        completed more than seven business days after presentation, to 
        accept a draft or incur a deferred obligation, or 
           (3) to give notice to the presenter of discrepancies in the 
        presentation. 
           (c) Except as otherwise provided in subsection (d), an 
        issuer is precluded from asserting as a basis for dishonor any 
        discrepancy if timely notice is not given, or any discrepancy 
        not stated in the notice if timely notice is given. 
           (d) Failure to give the notice specified in subsection (b) 
        or to mention fraud, forgery, or expiration in the notice does 
        not preclude the issuer from asserting as a basis for dishonor 
        fraud or forgery as described in section 336.5-109(a) or 
        expiration of the letter of credit before presentation. 
           (e) An issuer shall observe standard practice of financial 
        institutions that regularly issue letters of credit.  
        Determination of the issuer's observance of the standard 
        practice is a matter of interpretation for the court.  The court 
        shall offer the parties a reasonable opportunity to present 
        evidence of the standard practice. 
           (f) An issuer is not responsible for: 
           (1) the performance or nonperformance of the underlying 
        contract, arrangement, or transaction, 
           (2) an act or omission of others, or 
           (3) observance or knowledge of the usage of a particular 
        trade other than the standard practice referred to in subsection 
        (e). 
           (g) If an undertaking constituting a letter of credit under 
        section 336.5-102(a)(10) contains nondocumentary conditions, an 
        issuer shall disregard the nondocumentary conditions and treat 
        them as if they were not stated. 
           (h) An issuer that has dishonored a presentation shall 
        return the documents or hold them at the disposal of, and send 
        advice to that effect to, the presenter. 
           (i) An issuer that has honored a presentation as permitted 
        or required by this article: 
           (1) is entitled to be reimbursed by the applicant in 
        immediately available funds not later than the date of its 
        payment of funds; 
           (2) takes the documents free of claims of the beneficiary 
        or presenter; 
           (3) is precluded from asserting a right of recourse on a 
        draft under sections 336.3-414 and 336.3-415; 
           (4) except as otherwise provided in sections 336.5-110 and 
        336.5-117, is precluded from restitution of money paid or other 
        value given by mistake to the extent the mistake concerns 
        discrepancies in the documents or tender which are apparent on 
        the face of the presentation; and 
           (5) is discharged to the extent of its performance under 
        the letter of credit unless the issuer honored a presentation in 
        which a required signature of a beneficiary was forged. 
           Sec. 9.  [336.5-109] [FRAUD AND FORGERY.] 
           (a) If a presentation is made that appears on its face 
        strictly to comply with the terms and conditions of the letter 
        of credit, but a required document is forged or materially 
        fraudulent, or honor of the presentation would facilitate a 
        material fraud by the beneficiary on the issuer or applicant: 
           (1) the issuer shall honor the presentation, if honor is 
        demanded by (i) a nominated person who has given value in good 
        faith and without notice of forgery or material fraud, (ii) a 
        confirmer who has honored its confirmation in good faith, (iii) 
        a holder in due course of a draft drawn under the letter of 
        credit which was taken after acceptance by the issuer or 
        nominated person, or (iv) an assignee of the issuer's or 
        nominated person's deferred obligation that was taken for value 
        and without notice of forgery or material fraud after the 
        obligation was incurred by the issuer or nominated person; and 
           (2) the issuer, acting in good faith, may honor or dishonor 
        the presentation in any other case. 
           (b) If an applicant claims that a required document is 
        forged or materially fraudulent or that honor of the 
        presentation would facilitate a material fraud by the 
        beneficiary on the issuer or applicant, a court of competent 
        jurisdiction may temporarily or permanently enjoin the issuer 
        from honoring a presentation or grant similar relief against the 
        issuer or other persons only if the court finds that: 
           (1) the relief is not prohibited under the law applicable 
        to an accepted draft or deferred obligation incurred by the 
        issuer; 
           (2) a beneficiary, issuer, or nominated person who may be 
        adversely affected is adequately protected against loss that it 
        may suffer because the relief is granted; 
           (3) all of the conditions to entitle a person to the relief 
        under the law of this state have been met; and 
           (4) on the basis of the information submitted to the court, 
        the applicant is more likely than not to succeed under its claim 
        of forgery or material fraud and the person demanding honor does 
        not qualify for protection under subsection (a)(1). 
           Sec. 10.  [336.5-110] [WARRANTIES.] 
           (a) If its presentation is honored, the beneficiary 
        warrants: 
           (1) to the issuer, any other person to whom presentation is 
        made, and the applicant that there is no fraud or forgery of the 
        kind described in section 336.5-109(a); and 
           (2) to the applicant that the drawing does not violate any 
        agreement between the applicant and beneficiary or any other 
        agreement intended by them to be augmented by the letter of 
        credit. 
           (b) The warranties in subsection (a) are in addition to the 
        warranties arising under articles 3, 4, 7, and 8 because of the 
        presentation or transfer of documents covered by any of those 
        articles. 
           Sec. 11.  [336.5-111] [REMEDIES.] 
           (a) If an issuer wrongfully dishonors or repudiates its 
        obligation to pay money under a letter of credit before 
        presentation, the beneficiary, successor, or nominated person 
        presenting on its own behalf may recover from the issuer the 
        amount that is the subject of the dishonor or repudiation.  If 
        the issuer's obligation under the letter of credit is not for 
        the payment of money, the claimant may obtain specific 
        performance or, at the claimant's selection, recover an amount 
        equal to the value of performance from the issuer.  In either 
        case, the claimant may also recover incidental but not 
        consequential damages.  The claimant is not obligated to take 
        action to avoid damages that might be due from the issuer under 
        this subsection.  If, although not obligated to do so, the 
        claimant avoids damages, the claimant's recovery from the issuer 
        must be reduced by the amount of damages avoided.  The issuer 
        has the burden of proving the amount of damages avoided.  In the 
        case of repudiation the claimant need not present any document. 
           (b) If an issuer wrongfully dishonors a draft or demand 
        presented under a letter of credit or honors a draft or demand 
        in breach of its obligation to the applicant, the applicant may 
        recover damages resulting from the breach, including incidental 
        but not consequential damages, less any amount saved as a result 
        of the breach. 
           (c) If an adviser or nominated person other than a 
        confirmer breaches an obligation under this article or an issuer 
        breaches an obligation not covered in subsection (a) or (b), a 
        person to whom the obligation is owed may recover damages 
        resulting from the breach, including incidental but not 
        consequential damages, less any amount saved as a result of the 
        breach.  To the extent of the confirmation, a confirmer has the 
        liability of an issuer specified in this subsection and 
        subsections (a) and (b). 
           (d) An issuer, nominated person, or adviser who is found 
        liable under subsection (a), (b), or (c) shall pay interest on 
        the amount owed thereunder from the date of wrongful dishonor 
        or other appropriate date. 
           (e) Reasonable attorney's fees and other expenses of 
        litigation must be awarded to the prevailing party in an action 
        in which a remedy is sought under this article. 
           (f) Damages that would otherwise be payable by a party for 
        breach of an obligation under this article may be liquidated by 
        agreement or undertaking, but only in an amount or by a formula 
        that is reasonable in light of the harm anticipated. 
           Sec. 12.  [336.5-112] [TRANSFER OF LETTER OF CREDIT.] 
           (a) Except as otherwise provided in section 336.5-113, 
        unless a letter of credit provides that it is transferable, the 
        right of a beneficiary to draw or otherwise demand performance 
        under a letter of credit may not be transferred. 
           (b) Even if a letter of credit provides that it is 
        transferable, the issuer may refuse to recognize or carry out a 
        transfer if: 
           (1) the transfer would violate applicable law; or 
           (2) the transferor or transferee has failed to comply with 
        any requirement stated in the letter of credit or any other 
        requirement relating to transfer imposed by the issuer which is 
        within the standard practice referred to in section 336.5-108(e) 
        or is otherwise reasonable under the circumstances. 
           Sec. 13.  [336.5-113] [TRANSFER BY OPERATION OF LAW.] 
           (a) A successor of a beneficiary may consent to amendments, 
        sign and present documents, and receive payment or other items 
        of value in the name of the beneficiary without disclosing its 
        status as a successor. 
           (b) A successor of a beneficiary may consent to amendments, 
        sign and present documents, and receive payment or other items 
        of value in its own name as the disclosed successor of the 
        beneficiary.  Except as otherwise provided in subsection (e), an 
        issuer shall recognize a disclosed successor of a beneficiary as 
        beneficiary in full substitution for its predecessor upon 
        compliance with the requirements for recognition by the issuer 
        of a transfer of drawing rights by operation of law under the 
        standard practice referred to in section 336.5-108(e) or, in the 
        absence of such a practice, compliance with other reasonable 
        procedures sufficient to protect the issuer. 
           (c) An issuer is not obliged to determine whether a 
        purported successor is a successor of a beneficiary or whether 
        the signature of a purported successor is genuine or authorized. 
           (d) Honor of a purported successor's apparently complying 
        presentation under subsection (a) or (b) has the consequences 
        specified in section 336.5-108(i) even if the purported 
        successor is not the successor of a beneficiary.  Documents 
        signed in the name of the beneficiary or of a disclosed 
        successor by a person who is neither the beneficiary nor the 
        successor of the beneficiary are forged documents for the 
        purposes of section 336.5-109. 
           (e) An issuer whose rights of reimbursement are not covered 
        by subsection (d) or substantially similar law and any confirmer 
        or nominated person may decline to recognize a presentation 
        under subsection (b). 
           (f) A beneficiary whose name is changed after the issuance 
        of a letter of credit has the same rights and obligations as a 
        successor of a beneficiary under this section. 
           Sec. 14.  [336.5-114] [ASSIGNMENT OF PROCEEDS.] 
           (a) In this section, "proceeds of a letter of credit" means 
        the cash, check, accepted draft, or other item of value paid or 
        delivered upon honor or giving of value by the issuer or any 
        nominated person under the letter of credit.  The term does not 
        include a beneficiary's drawing rights or documents presented by 
        the beneficiary. 
           (b) A beneficiary may assign its right to a part or all of 
        the proceeds of a letter of credit.  The beneficiary may do so 
        before presentation as a present assignment of its right to 
        receive proceeds contingent upon its compliance with the terms 
        and conditions of the letter of credit. 
           (c) An issuer or nominated person need not recognize an 
        assignment of proceeds of a letter of credit until it consents 
        to the assignment. 
           (d) An issuer or nominated person has no obligation to give 
        or withhold its consent to an assignment of proceeds of a letter 
        of credit, but consent may not be unreasonably withheld if the 
        assignee possesses and exhibits the letter of credit and 
        presentation of the letter of credit is a condition to honor. 
           (e) Rights of a transferee beneficiary or nominated person 
        are independent of the beneficiary's assignment of the proceeds 
        of a letter of credit and are superior to the assignee's right 
        to the proceeds. 
           (f) Neither the rights recognized by this section between 
        an assignee and an issuer, transferee beneficiary, or nominated 
        person nor the issuer's or nominated person's payment of 
        proceeds to an assignee or a third person affect the rights 
        between the assignee and any person other than the issuer, 
        transferee beneficiary, or nominated person.  The mode of 
        creating and perfecting a security interest in or granting an 
        assignment of a beneficiary's rights to proceeds is governed by 
        article 9 or other law.  Against persons other than the issuer, 
        transferee beneficiary, or nominated person, the rights and 
        obligations arising upon the creation of a security interest or 
        other assignment of a beneficiary's right to proceeds and its 
        perfection are governed by article 9 or other laws. 
           Sec. 15.  [336.5-115] [STATUTE OF LIMITATIONS.] 
           An action to enforce a right or obligation arising under 
        this article must be commenced within one year after the 
        expiration date of the relevant letter of credit or one year 
        after the claim for relief accrues, whichever occurs later.  A 
        claim for relief accrues when the breach occurs, regardless of 
        the aggrieved party's lack of knowledge of the breach. 
           Sec. 16.  [336.5-116] [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 section 336.5-104 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) applies, the liability of an 
        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 address 
        is indicated, the person is considered to be located at the 
        address from which the person's undertaking was issued.  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. 
           (c) 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 article would govern the liability of an 
        issuer, nominated person, or adviser under subsection (a) or 
        (b), (ii) the relevant undertaking incorporates rules of custom 
        or practice, and (iii) there is conflict between this article 
        and those rules as applied to that undertaking, those rules 
        govern except to the extent of any conflict with the nonvariable 
        provisions specified in section 336.5-103(c). 
           (d) If there is conflict between this article and article 
        3, 4, 4A, or 9, this article governs. 
           (e) The forum for settling disputes arising out of an 
        undertaking within this article may be chosen in the manner and 
        with the binding effect that governing law may be chosen in 
        accordance with subsection (a). 
           Sec. 17.  [336.5-117] [SUBROGATION OF ISSUER, APPLICANT, 
        AND NOMINATED PERSON.] 
           (a) An issuer that honors a beneficiary's presentation is 
        subrogated to the rights of the beneficiary to the same extent 
        as if the issuer were a secondary obligor of the underlying 
        obligation owed to the beneficiary and of the applicant to the 
        same extent as if the issuer were the secondary obligor of the 
        underlying obligation owed to the applicant. 
           (b) An applicant that reimburses an issuer is subrogated to 
        the rights of the issuer against any beneficiary, presenter, or 
        nominated person to the same extent as if the applicant were the 
        secondary obligor of the obligations owed to the issuer and has 
        the rights of subrogation of the issuer to the rights of the 
        beneficiary stated in subsection (a). 
           (c) A nominated person who pays or gives value against a 
        draft or demand presented under a letter of credit is subrogated 
        to the rights of: 
           (1) the issuer against the applicant to the same extent as 
        if the nominated person were a secondary obligor of the 
        obligation owed to the issuer by the applicant; 
           (2) the beneficiary to the same extent as if the nominated 
        person were a secondary obligor of the underlying obligation 
        owed to the beneficiary; and 
           (3) the applicant to the same extent as if the nominated 
        person were a secondary obligor of the underlying obligation 
        owed to the applicant. 
           (d) Notwithstanding any agreement or term to the contrary, 
        the rights of subrogation stated in subsections (a) and (b) do 
        not arise until the issuer honors the letter of credit or 
        otherwise pays and the rights in subsection (c) do not arise 
        until the nominated person pays or otherwise gives value.  Until 
        then, the issuer, nominated person, and the applicant do not 
        derive under this section present or prospective rights forming 
        the basis of a claim, defense, or excuse. 
           Sec. 18.  [APPLICABILITY.] 
           This act applies to a letter of credit that is issued on or 
        after the effective date of this act.  This act does not apply 
        to a transaction, event, obligation, or duty arising out of or 
        associated with a letter of credit that was issued before the 
        effective date of this act. 
           Sec. 19.  [SAVINGS CLAUSE.] 
           A transaction arising out of or associated with a letter of 
        credit that was issued before the effective date of this act and 
        the rights, obligations, and interests flowing from that 
        transaction are governed by any statute or other law amended or 
        repealed by this act as if repeal or amendment had not occurred 
        and may be terminated, completed, consummated, or enforced under 
        that statute or other law. 
           Sec. 20.  [REPEALER.] 
           Minnesota Statutes 1996, sections 336.5-101; 336.5-102; 
        336.5-103; 336.5-104; 336.5-105; 336.5-106; 336.5-107; 
        336.5-108; 336.5-109; 336.5-110; 336.5-111; 336.5-112; 
        336.5-113; 336.5-114; 336.5-115; 336.5-116; and 336.5-117, are 
        repealed. 
                                   ARTICLE 2 
                    CONFORMING AND MISCELLANEOUS AMENDMENTS
           Section 1.  Minnesota Statutes 1996, section 336.1-105, is 
        amended to read: 
           336.1-105 [TERRITORIAL APPLICATION OF THE CHAPTER; PARTIES' 
        POWER TO CHOOSE APPLICABLE LAW.] 
           (1) Except as provided hereafter 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 
        chapter applies to transactions bearing an appropriate relation 
        to this state. 
           (2) Where one of the following provisions of this chapter 
        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 336.2-402. 
           Applicability of the article on leases.  Sections 
        336.2A-105 and 336.2A-106.  
           Applicability of the article on bank deposits and 
        collections.  Section 336.4-102. 
           Governing law in the article on funds transfers.  Section 
        336.4A-507. 
           Letters of Credit.  Section 336.5-116. 
           Applicability of the article on investment securities. 
        Section 336.8-110. 
           Perfection provisions of the article on secured 
        transactions.  Section 336.9-103. 
           Sec. 2.  Minnesota Statutes 1996, section 336.2-512, is 
        amended to read: 
           336.2-512 [PAYMENT BY BUYER BEFORE INSPECTION.] 
           (1) Where the contract requires payment before inspection 
        nonconformity of the goods does not excuse the buyer from so 
        making payment unless 
           (a) the nonconformity appears without inspection; or 
           (b) despite tender of the required documents the 
        circumstances would justify injunction against honor under the 
        provisions of this chapter (section 336.5-114 336.5-109(b)).  
           (2) Payment pursuant to subsection (1) does not constitute 
        an acceptance of goods or impair the buyer's right to inspect or 
        any of the buyer's remedies.  
           Sec. 3.  Minnesota Statutes 1996, section 336.9-103, is 
        amended to read: 
           336.9-103 [PERFECTION OF SECURITY INTERESTS IN MULTIPLE 
        STATE TRANSACTIONS.] 
           (1) Documents, instruments, letters of credit, and ordinary 
        goods. 
           (a) This subsection applies to documents and, instruments, 
        rights to proceeds of written letters of credit, and to goods 
        other than those covered by a certificate of title described in 
        subsection (2), mobile goods described in subsection (3), and 
        minerals described in subsection (5). 
           (b) Except as otherwise provided in this subsection, 
        perfection and the effect of perfection or nonperfection of a 
        security interest in collateral are governed by the law of the 
        jurisdiction where the collateral is when the last event occurs 
        on which is based the assertion that the security interest is 
        perfected or unperfected. 
           (c) If the parties to a transaction creating a purchase 
        money security interest in goods in one jurisdiction understand 
        at the time that the security interest attaches that the goods 
        will be kept in another jurisdiction, then the law of the other 
        jurisdiction governs the perfection and the effect of perfection 
        or nonperfection of the security interest from the time it 
        attaches until 30 days after the debtor receives possession of 
        the goods and thereafter if the goods are taken to the other 
        jurisdiction before the end of the 30-day period. 
           (d) When collateral is brought into and kept in this state 
        while subject to a security interest perfected under the law of 
        the jurisdiction from which the collateral was removed, the 
        security interest remains perfected, but if action is required 
        by part 3 of this article to perfect the security interest, 
           (i) if the action is not taken before the expiration of the 
        period of perfection in the other jurisdiction or the end of 
        four months after the collateral is brought into this state, 
        whichever period first expires, the security interest becomes 
        unperfected at the end of that period and is thereafter deemed 
        to have been unperfected as against a person who became a 
        purchaser after removal; 
           (ii) if the action is taken before the expiration of the 
        period specified in subparagraph (i), the security interest 
        continues perfected thereafter; 
           (iii) for the purpose of priority over a buyer of consumer 
        goods (subsection (2) of section 336.9-307), the period of the 
        effectiveness of a filing in the jurisdiction from which the 
        collateral is removed is governed by the rules with respect to 
        perfection in subparagraphs (i) and (ii). 
           (2) Certificate of title. 
           (a) This subsection applies to goods covered by a 
        certificate of title issued under a statute of this state or of 
        another jurisdiction under the law of which indication of a 
        security interest on the certificate is required as a condition 
        of perfection. 
           (b) Except as otherwise provided in this subsection, 
        perfection and the effect of perfection or nonperfection of the 
        security interest are governed by the law (including the 
        conflict of laws rules) of the jurisdiction issuing the 
        certificate until four months after the goods are removed from 
        that jurisdiction and thereafter until the goods are registered 
        in another jurisdiction, but in any event not beyond surrender 
        of the certificate.  After the expiration of that period, the 
        goods are not covered by the certificate of title within the 
        meaning of this section. 
           (c) Except with respect to the rights of a buyer described 
        in the next paragraph, a security interest, perfected in another 
        jurisdiction otherwise than by notation on a certificate of 
        title, in goods brought into this state and thereafter covered 
        by a certificate of title issued by this state is subject to the 
        rules stated in paragraph (d) of subsection (1). 
           (d) If goods are brought into this state while a security 
        interest therein is perfected in any manner under the law of the 
        jurisdiction from which the goods are removed and a certificate 
        of title is issued by this state and the certificate does not 
        show that the goods are subject to the security interest or that 
        they may be subject to security interests not shown on the 
        certificate, the security interest is subordinate to the rights 
        of a buyer of the goods who is not in the business of selling 
        goods of that kind to the extent that the buyer gives value and 
        receives delivery of the goods after issuance of the certificate 
        and without knowledge of the security interest. 
           (3) Accounts, general intangibles and mobile goods. 
           (a) This subsection applies to accounts (other than an 
        account described in subsection (5) on minerals) and general 
        intangibles (other than uncertificated securities) and to goods 
        which are mobile and which are of a type normally used in more 
        than one jurisdiction, such as motor vehicles, trailers, rolling 
        stock, airplanes, shipping containers, road building and 
        construction machinery and commercial harvesting machinery and 
        the like, if the goods are equipment or are inventory leased or 
        held for lease by the debtor to others, and are not covered by a 
        certificate of title described in subsection (2). 
           (b) The law (including the conflict of laws rules) of the 
        jurisdiction in which the debtor is located governs the 
        perfection and the effect of perfection or nonperfection of the 
        security interest. 
           (c) If, however, the debtor is located in a jurisdiction 
        which is not a part of the United States, and which does not 
        provide for perfection of the security interest by filing or 
        recording in that jurisdiction, the law of the jurisdiction in 
        the United States in which the debtor has its major executive 
        office in the United States governs the perfection and the 
        effect of perfection or nonperfection of the security interest 
        through filing.  In the alternative, if the debtor is located in 
        a jurisdiction which is not a part of the United States or 
        Canada and the collateral is accounts or general intangibles for 
        money due or to become due, the security interest may be 
        perfected by notification to the account debtor.  As used in 
        this paragraph, "United States" includes its territories and 
        possessions and the Commonwealth of Puerto Rico. 
           (d) A debtor shall be deemed located at the debtor's place 
        of business if the debtor has one, at the chief executive office 
        if there is more than one place of business, otherwise at the 
        debtor's residence.  If, however, the debtor is a foreign air 
        carrier under the Federal Aviation Act of 1958, as amended, it 
        shall be deemed located at the designated office of the agent 
        upon whom service of process may be made on behalf of the 
        foreign air carrier. 
           (e) A security interest perfected under the law of the 
        jurisdiction of the location of the debtor is perfected until 
        the expiration of four months after a change of the debtor's 
        location to another jurisdiction, or until perfection would have 
        ceased by the law of the first jurisdiction, whichever period 
        first expires.  Unless perfected in the new jurisdiction before 
        the end of that period, it becomes unperfected thereafter and is 
        deemed to have been unperfected as against a person who became a 
        purchaser after the change. 
           (4) Chattel paper. 
           The rules stated for goods in subsection (1) apply to a 
        possessory security interest in chattel paper.  The rules stated 
        for accounts in subsection (3) apply to a nonpossessory security 
        interest in chattel paper, but the security interest may not be 
        perfected by notification to the account debtor. 
           (5) Minerals. 
           Perfection and the effect of perfection or nonperfection of 
        a security interest which is created by a debtor who has an 
        interest in minerals or the like (including oil and gas) before 
        extraction and which attaches thereto as extracted, or which 
        attaches to an account resulting from the sale thereof at the 
        wellhead or minehead are governed by the law (including the 
        conflict of laws rules) of the jurisdiction wherein the wellhead 
        or minehead is located. 
           (6) Investment property. 
           (a) This subsection applies to investment property.  
           (b) Except as otherwise provided in paragraph (f), during 
        the time that a security certificate is located in a 
        jurisdiction, perfection of a security interest, the effect of 
        perfection or nonperfection, and the priority of a security 
        interest in the certificated security represented thereby are 
        governed by the local law of that jurisdiction.  
           (c) Except as otherwise provided in paragraph (f), 
        perfection of a security interest, the effect of perfection or 
        nonperfection, and the priority of a security interest in an 
        uncertificated security are governed by the local law of the 
        issuer's jurisdiction as specified in section 336.8-110(d).  
           (d) Except as otherwise provided in paragraph (f), 
        perfection of a security interest, the effect of perfection or 
        nonperfection, and the priority of a security interest in a 
        security entitlement or securities account are governed by the 
        local law of the securities intermediary's jurisdiction as 
        specified in section 336.8-110(e).  
           (e) Except as otherwise provided in paragraph (f), 
        perfection of a security interest, the effect of perfection or 
        nonperfection, and the priority of a security interest in a 
        commodity contract or commodity account are governed by the 
        local law of the commodity intermediary's jurisdiction.  The 
        following rules determine a "commodity intermediary's 
        jurisdiction" for purposes of this paragraph:  
           (i) If an agreement between the commodity intermediary and 
        commodity customer specifies that it is governed by the law of a 
        particular jurisdiction, that jurisdiction is the commodity 
        intermediary's jurisdiction.  
           (ii) If an agreement between the commodity intermediary and 
        commodity customer does not specify the governing law as 
        provided in subparagraph (i), but expressly specifies that the 
        commodity account is maintained at an office in a particular 
        jurisdiction, that jurisdiction is the commodity intermediary's 
        jurisdiction.  
           (iii) If an agreement between the commodity intermediary 
        and commodity customer does not specify a jurisdiction as 
        provided in subparagraph (i) or (ii), the commodity 
        intermediary's jurisdiction is the jurisdiction in which is 
        located the office identified in an account statement as the 
        office serving the commodity customer's account.  
           (iv) If an agreement between the commodity intermediary and 
        commodity customer does not specify a jurisdiction as provided 
        in subparagraph (i) or (ii) and an account statement does not 
        identify an office serving the commodity customer's account as 
        provided in subparagraph (iii), the commodity intermediary's 
        jurisdiction is the jurisdiction in which is located the chief 
        executive office of the commodity intermediary.  
           (f) Perfection of a security interest by filing, automatic 
        perfection of a security interest in investment property granted 
        by a broker or securities intermediary, and automatic perfection 
        of a security interest in a commodity contract or commodity 
        account granted by a commodity intermediary are governed by the 
        local law of the jurisdiction in which the debtor is located. 
           Sec. 4.  Minnesota Statutes 1996, section 336.9-104, is 
        amended to read: 
           336.9-104 [TRANSACTIONS EXCLUDED FROM ARTICLE.] 
           This article does not apply 
           (a) to a security interest subject to any statute of the 
        United States such as the Ship Mortgage Act, 1920, to the extent 
        that such statute governs the rights of parties to and third 
        parties affected by transactions in particular types of 
        property; or 
           (b) to a landlord's lien; or 
           (c) to a lien given by statute or other rule of law for 
        services or materials except as provided in section 336.9-310 on 
        priority of such liens; or 
           (d) to a transfer of a claim for wages, salary or other 
        compensation of an employee; or 
           (e) to a transfer by a government or governmental 
        subdivision or agency to the extent that this article conflicts 
        with special statutory provisions relating to such a transfer; 
        or 
           (f) to a sale of accounts or chattel paper as part of a 
        sale of the business out of which they arose, or an assignment 
        of accounts or chattel paper which is for the purpose of 
        collection only, or a transfer of a right to payment under a 
        contract to an assignee who is also to do the performance under 
        the contract or a transfer of a single account to an assignee in 
        whole or partial satisfaction of a preexisting indebtedness; or 
           (g) to a transfer of an interest or claim in or under any 
        policy of insurance, except as provided with reference to 
        proceeds (section 336.9-306) and priorities in proceeds section 
        (336.9-312); or 
           (h) to a right represented by a judgment (other than a 
        judgment taken on a right to payment which was collateral); or 
           (i) to any right of setoff; or 
           (j) except to the extent that provision is made for 
        fixtures in section 336.9-313, to the creation or transfer of an 
        interest in or lien on real estate, including a lease or rents 
        thereunder; or 
           (k) to a transfer in whole or in part of any claim arising 
        out of tort; or 
           (l) to a transfer of an interest in any deposit account 
        (subsection (l) of section 336.9-105), except as provided with 
        respect to proceeds (section 336.9-306) and priorities in 
        proceeds (section 336.9-312).; or 
           (m) except to the extent this article is not superseded by 
        sections 327.61 to 327.67, to the repossession of a manufactured 
        home meeting the definition contained in section 327.62; or 
           (n) to a transfer of an interest in a letter of credit 
        other than the rights to proceeds of a written letter of credit. 
           Sec. 5.  Minnesota Statutes 1996, section 336.9-105, is 
        amended to read: 
           336.9-105 [DEFINITIONS AND INDEX OF DEFINITIONS.] 
           (1) In this article unless the context otherwise requires: 
           (a) "Account debtor" means the person who is obligated on 
        an account, chattel paper or general intangible; 
           (b) "Chattel paper" means a writing or writings which 
        evidence both a monetary obligation and a security interest in 
        or a lease of specific goods, but a charter or other contract 
        involving the use or hire of a vessel is not chattel paper.  
        When a transaction is evidenced both by such a security 
        agreement or a lease and by an instrument or a series of 
        instruments, the group of writings taken together constitutes 
        chattel paper; 
           (c) "Collateral" means the property subject to a security 
        interest, and includes accounts and chattel paper which have 
        been sold; 
           (d) "Debtor" means the person who owes payment or other 
        performance of the obligation secured, whether or not the person 
        owns or has rights in the collateral, and includes the seller of 
        accounts or chattel paper.  Where the debtor and the owner of 
        the collateral are not the same person, the term "debtor" means 
        the owner of the collateral in any provision of the article 
        dealing with the collateral, the obligor in any provision 
        dealing with the obligation, and may include both where the 
        context so requires; 
           (e) "Deposit account" means a demand, time, savings, 
        passbook or like account maintained with a bank, savings 
        association, credit union or like organization, other than an 
        account evidenced by a certificate of deposit; 
           (f) "Document" means document of title as defined in the 
        general definitions of article 1 (section 336.1-201) and a 
        receipt of the kind described in subsection (2) of section 
        336.7-201; 
           (g) "Encumbrance" includes real estate mortgages and other 
        liens on real estate and all other rights in real estate that 
        are not ownership interests; 
           (h) "Goods" includes all things which are movable at the 
        time the security interest attaches or which are fixtures 
        (section 336.9-313), but does not include money, documents, 
        instruments, investment property, accounts, chattel paper, 
        general intangibles, or minerals or the like (including oil and 
        gas) before extraction.  "Goods" also include standing timber 
        which is to be cut and removed under a conveyance or contract 
        for sale, the unborn young of animals and growing crops; 
           (i) "Instrument" means a negotiable instrument (defined in 
        section 336.3-104) or any other writing which evidences a right 
        to the payment of money and is not itself a security agreement 
        or lease and is of a type which is in ordinary course of 
        business transferred by delivery with any necessary endorsement 
        or assignment.  The term does not include investment property; 
           (j) "Mortgage" means a consensual interest created by a 
        real estate mortgage, a trust deed on real estate, or the like; 
           (k) An advance is made "pursuant to commitment" if the 
        secured party has made a binding promise to make it, whether or 
        not a subsequent event of default or other event not within the 
        secured party's control has relieved or may relieve the secured 
        party from the obligation; 
           (l) "Security agreement" means an agreement which creates 
        or provides for a security interest; 
           (m) "Secured party" means a lender, seller or other person 
        in whose favor there is a security interest, including a person 
        to whom accounts or chattel paper have been sold.  When the 
        holders of obligations issued under an indenture of trust, 
        equipment trust agreement or the like are represented by a 
        trustee or other person, the representative is the secured 
        party; and 
           (n) "Transmitting utility" means any person engaged in the 
        railroad, street railway or trolley bus business, the electric 
        or electronics communications transmission business, the 
        transmission of goods by pipeline, or the transmission or the 
        production and transmission of electricity, steam, gas or water, 
        or the provision of sewer service.  Any person filing a 
        financing statement under this article and under authority of 
        the provisions of Minnesota Statutes 1974, Sections 300.111 to 
        300.115 shall be deemed a "transmitting utility" hereunder. 
           (2) Other definitions applying to this article and the 
        sections in which they appear are: 
           "Account," section 336.9-106. 
           "Attach," section 336.9-203. 
           "Commodity contract," section 336.9-115. 
           "Commodity customer," section 336.9-115. 
           "Commodity intermediary," section 336.9-115. 
           "Construction mortgage," section 336.9-313(1). 
           "Consumer goods," section 336.9-109(1). 
           "Control," section 336.9-115. 
           "Equipment," section 336.9-109(2). 
           "Farm products," section 336.9-109(3). 
           "Fixture," section 336.9-313. 
           "Fixture filing," section 336.9-313. 
           "General intangibles," section 336.9-106. 
           "Inventory," section 336.9-109(4). 
           "Investment property," section 336.9-115. 
           "Lien creditor," section 336.9-301(3). 
           "Motor vehicle," section 336.9-401(7). 
           "Proceeds," section 336.9-306(1). 
           "Purchase money security interest," section 336.9-107. 
           "United States," section 336.9-103. 
           (3) The following definitions in other articles apply to 
        this article: 
           "Broker," section 336.8-102. 
           "Certificated security," section 336.8-102. 
           "Check," section 336.3-104. 
           "Clearing corporation," section 336.8-102. 
           "Contract for sale," section 336.2-106. 
           "Control," section 336.8-106. 
           "Delivery," section 336.8-301. 
           "Entitlement holder," section 336.8-102. 
           "Financial asset," section 336.8-102. 
           "Holder in due course," section 336.3-302. 
           "Letter of credit," section 336.5-102. 
           "Note," section 336.3-104. 
           "Proceeds of a letter of credit," section 336.5-114(a). 
           "Sale," section 336.2-106. 
           "Securities intermediary," section 336.8-102. 
           "Security," section 336.8-102. 
           "Security certificate," section 336.8-102. 
           "Security entitlement," section 336.8-102. 
           "Uncertificated security," section 336.8-102. 
           (4) In addition article 1 contains general definitions and 
        principles of construction and interpretation applicable 
        throughout this article. 
           Sec. 6.  Minnesota Statutes 1996, section 336.9-106, is 
        amended to read: 
           336.9-106 [DEFINITIONS:  "ACCOUNT"; "GENERAL INTANGIBLES".] 
           "Account" means any right to payment for goods sold or 
        leased or for services rendered which is not evidenced by an 
        instrument or chattel paper whether or not it has been earned by 
        performance.  "General intangibles" means any personal property 
        (including things in action) other than goods, accounts, chattel 
        paper, documents, instruments, investment property, rights to 
        proceeds of written letters of credit, and money.  All rights 
        earned or unearned under a charter or other contract involving 
        the use or hire of a vessel and all rights incident to the 
        charter or contract are accounts. 
           Sec. 7.  Minnesota Statutes 1996, section 336.9-304, is 
        amended to read: 
           336.9-304 [PERFECTION OF SECURITY INTEREST IN INSTRUMENTS, 
        DOCUMENTS, PROCEEDS OF A WRITTEN LETTER OF CREDIT, 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.  A security interest in 
        the rights to proceeds of a written letter of credit can be 
        perfected only by the secured party's taking possession of the 
        letter of credit.  A security interest in money or instruments 
        (other than instruments which constitute part of chattel paper) 
        can be perfected only by the secured party's taking possession, 
        except as provided in subsections (4) and (5) of this section 
        and subsections (2) and (3) of section 336.9-306 on proceeds. 
           (2) During the period that goods are in the possession of 
        the issuer of a negotiable document therefor, a security 
        interest in the goods is perfected by perfecting a security 
        interest in the document, and any security interest in the goods 
        otherwise perfected during such period is subject thereto. 
           (3) A security interest in goods in the possession of a 
        bailee other than one who has issued a negotiable document 
        therefor is perfected by issuance of a document in the name of 
        the secured party or by the bailee's receipt of notification of 
        the secured party's interest or by filing as to the goods. 
           (4) A security interest in instruments, certificated 
        securities, or negotiable documents is perfected without filing 
        or the taking of possession for a period of 21 days from the 
        time it attaches to the extent that it arises for new value 
        given under a written security agreement. 
           (5) A security interest remains perfected for a period of 
        21 days without filing where a secured party having a perfected 
        security interest in an instrument, a certificated security, a 
        negotiable document, or goods in possession of a bailee other 
        than one who has issued a negotiable document therefor: 
           (a) makes available to the debtor the goods or documents 
        representing the goods for the purpose of ultimate sale or 
        exchange or for the purpose of loading, unloading, storing, 
        shipping, transshipping, manufacturing, processing or otherwise 
        dealing with them in a manner preliminary to their sale or 
        exchange but priority between conflicting security interests in 
        the goods is subject to subsection (3) of section 336.9-312; or 
           (b) delivers the instrument or certificated security to the 
        debtor for the purpose of ultimate sale or exchange or of 
        presentation, collection, renewal, or registration of transfer. 
           (6) After the 21 day period in subsections (4) and (5) 
        perfection depends upon compliance with applicable provisions of 
        this article. 
           Sec. 8.  Minnesota Statutes 1996, section 336.9-305, is 
        amended to read: 
           336.9-305 [WHEN POSSESSION BY SECURED PARTY PERFECTS 
        SECURITY INTEREST WITHOUT FILING.] 
           A security interest in letters of credit and advices of 
        credit (subsection (2) (a) of section 336.5-116), goods, 
        instruments, money, negotiable documents, or chattel paper may 
        be perfected by the secured party's taking possession of the 
        collateral.  A security interest in the rights to proceeds of a 
        written letter of credit may be perfected only by the secured 
        party's taking possession of the letter of credit.  If such 
        collateral other than goods covered by a negotiable document is 
        held by a bailee, the secured party is deemed to have possession 
        from the time the bailee receives notification of the secured 
        party's interest.  A security interest is perfected by 
        possession from the time possession is taken without relation 
        back and continues only so long as possession is retained, 
        unless otherwise specified in this article.  The security 
        interest may be otherwise perfected as provided in this article 
        before or after the period of possession by the secured party. 
           Sec. 9.  [REVISOR'S INSTRUCTION.] 
           The revisor shall change the reference to "section 
        336.5-103" to "section 336.5-102" wherever it appears in 
        Minnesota Statutes, sections 223.17 and 223.177. 
           Presented to the governor March 17, 1997 
           Signed by the governor March 18, 1997, 9:23 a.m.