41-09-05. (9-105) Control of electronic copy of record evidencing chattel paper

41-09-05. (9-105) Control of electronic copy of record evidencing chattel paper

1. A purchaser has control of an authoritative electronic copy of a record evidencing

chattel paper if a system employed for evidencing the assignment of interests in the

chattel paper reliably establishes the purchaser as the person to which the

authoritative electronic copy was assigned.

2. A system satisfies subsection 1 if the record or records evidencing the chattel paper

are created, stored, and assigned in such a manner that:

a. A single authoritative copy of the record or records exists which is unique,

identifiable, and, except as otherwise provided in subdivisions d, e, and f,

unalterable;

b. The authoritative copy identifies the purchaser as the assignee of the record or

records;

c. The authoritative copy is communicated to and maintained by the purchaser or its

designated custodian;

d. Copies or amendments that add or change an identified assignee of the

authoritative copy can be made only with the consent of the purchaser;

e. Each copy of the authoritative copy and any copy of a copy is readily identifiable

as a copy that is not the authoritative copy; and

f. Any amendment of the authoritative copy is readily identifiable as authorized or

unauthorized.

3. A system satisfies subsection 1, and a purchaser has control of an authoritative

electronic copy of a record evidencing chattel paper, if the electronic copy, a record

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

electronic copy is recorded:

a. Enables the purchaser readily to identify each electronic copy as either an

authoritative copy or a nonauthoritative copy;

b. Enables the purchaser readily to identify itself in any way, including by name,

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

of the authoritative electronic copy; and

c. Gives the purchaser exclusive power, subject to subsection 4, to:

(1) Prevent others from adding or changing an identified assignee of the

authoritative electronic copy; and

(2) Transfer control of the authoritative electronic copy.

4. Subject to subsection 5, a power is exclusive under subdivision c of subsection 3 even

if:

a. The authoritative electronic copy, a record attached to or logically associated with

the authoritative electronic copy, or a system in which the authoritative electronic

copy is recorded limits the use of the authoritative electronic copy or has a

protocol programmed to cause a change, including a transfer or loss of control; or

b. The power is shared with another person.

5. A power of a purchaser is not shared with another person under subdivision b of

subsection 4 and the purchaser's power is not exclusive if:

a. The purchaser can exercise the power only if the power also is exercised by the

other person; and

b. The other person:

(1) Can exercise the power without exercise of the power by the purchaser; or

(2) Is the transferor to the purchaser of an interest in the chattel paper.

6. If a purchaser has the powers specified in subdivision c of subsection 3, the powers

are presumed to be exclusive.

7. A purchaser has control of an authoritative electronic copy of a record evidencing

chattel paper if another person, other than the transferor to the purchaser of an

interest in the chattel paper:

a. Has control of the authoritative electronic copy and acknowledges that it has

control on behalf of the purchaser; or

b. Obtains control of the authoritative electronic copy after having acknowledged

that it will obtain control of the electronic copy on behalf of the purchaser.