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| Home > Statutes > USA Massachusetts |
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USA Statutes : massachusetts
Title : PART I. ADMINISTRATION OF THE GOVERNMENT
Chapter : TITLE XV. REGULATION OF TRADE
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Chapter 110: Section 5. Certificates of persons conducting businesses; contents; filing; fees; index Section 5. Any person conducting business in the commonwealth under any title other than the real name of the person conducting the business, whether individually or as a partnership, shall file in the office of the clerk of every city or town where an office of any such person or partnership may be situated a certificate stating the full name and residence of each person conducting such business, the place, including street and number, where, and the title under which, it is conducted, and pay the fee as provided by clause (20) of section thirty-four of chapter two hundred and sixty-two. Such certificate shall be executed under oath by each person whose name appears therein as conducting such business and shall be signed by each such person in the presence of the city or town clerk or a person designated by him or in the presence of a person authorized to take oaths. The city or town clerk may request the person filing such certificate to produce evidence of his identity and, if such person does not, upon such request, produce evidence thereof satisfactory to such clerk, the clerk shall enter a notation of that fact on the face of the certificate. A person who has filed such a certificate shall, upon his discontinuing, retiring or withdrawing from such business or partnership, or in the case of a change of residence of such person or of the location where the business is conducted, file in the office of said clerk a statement under oath that he has discontinued, retired or withdrawn from such business or partnership or of such change of his residence or change of the location of such business, and pay the fee required by clause (21) of said section thirty-four. In the case of death of such a person, such statement may be filed by the executor or administrator of his estate. The clerk shall keep a suitable index of all certificates so filed with him which are currently in force and effect, setting forth the pertinent facts, including a reference to any statement of discontinuance, retirement or withdrawal from, or change of location of, such business, or change of residence of such person. A certificate issued in accordance with this section shall be in force and effect for four years from the date of issue and shall be renewed each four years thereafter so long as such business shall be conducted and shall lapse and be void unless so renewed. Copies of such certificates shall be available at the address at which such business is conducted and shall be furnished on request during regular business hours, to any person who has purchased goods or services from such business. Violations of this section shall be punished by a fine of not more than three hundred dollars for each month during which such violation continues.
Chapter 110: Section 6. Certificates; application of Sec. 5 Section 6. The preceding section shall not apply to any corporation doing business under its true corporate name, nor to any partnership doing business under any title which includes the true surname of any partner; nor to any association which has complied with sections five and six of chapter one hundred and fifty-nine; nor to any partnership, joint stock company or association the business of which is conducted by trustees under a written instrument or declaration of trust, provided that the names of such trustees with a reference to such instrument or declaration of trust shall be filed as provided in section five, nor to any limited partnership organized or qualified under chapter one hundred and nine doing business under its true partnership name if such name contains without abbreviation the words “limited partnership”; nor to a limited liability company or limited liability partnership which is doing business under its true name and which has registered or qualified with the office of the state secretary.
Chapter 110: Section 7 to 15. Repealed, 1973, 897, Sec. 2 Chapter 110A: Section 101. Sales and Purchases Section 101. It is unlawful for any person, in connection with the offer, sale, or purchase of any security, directly or indirectly(1) to employ any device, scheme, or artifice to defraud,(2) to make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading, or(3) to engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person.
Chapter 110A: Section 102. Advisory Activities Section 102. It is unlawful for any person who receives, directly or indirectly, any consideration from another person primarily for advising the other person as to the value of securities or their purchase or sale, whether through the issuance of analyses or reports or otherwise(1) to employ any device, scheme, or artifice to defraud the other person, or(2) to engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon the other person.
Chapter 110A: Section 201. Registration Requirement Section 201. (a) It is unlawful for any person to transact business in this commonwealth as a broker-dealer or agent unless he is registered under this chapter.
(b) It is unlawful for any broker-dealer or issuer to employ an agent unless the agent is registered. The registration of an agent is not effective during any period when he is not associated with a particular broker-dealer registered under this chapter or a particular issuer. When an agent begins or terminates a connection with a broker-dealer or issuer, or begins or terminates those activities which make him an agent, the agent as well as the broker-dealer or issuer shall promptly notify the secretary.
(c) It is unlawful for any person to transact business in this commonwealth as an investment adviser or as an investment adviser representative unless he is so registered under this chapter.
(d) It is unlawful for:(i) any investment adviser required to be registered to employ an investment adviser representative unless the investment adviser representative is registered under this chapter, but the registration of an investment adviser representative shall not be effective during any period when he is not employed by an investment adviser registered under this chapter; or(ii) any investment adviser representative, as defined in Rule 203A-3(a) under the Investment Adviser Act of 1940, with a place of business, as defined in Rule 203A-3(b) under the Investment Adviser Act of 1940, in the commonwealth, who is employed by a federal covered adviser to conduct business in the commonwealth, unless registered under this chapter.
When an investment adviser representative begins or terminates employment with an investment adviser, the investment adviser in the case of clause (i) of subsection (d), or the investment adviser representative in the case of clause (ii) of said subsection (d), shall promptly notify the secretary.
(e) Every annual registration under this section shall expire on December 31.
(f) It is unlawful for any federal covered adviser to conduct advisory business in the commonwealth unless the adviser complies with the provisions of paragraph (b) of section 202.
Chapter 110A: Section 202. Registration Procedure Section 202. (a) A broker-dealer, agent, investment adviser or investment adviser representative may obtain an initial or renewal registration by filing with the secretary or his designee an application together with a consent to service of process pursuant to paragraph (g) of section 414, and paying any reasonable costs charged for processing such filings. The application shall contain whatever information the secretary by rule requires concerning such matters as:(1) the applicant’s form and place of organization;(2) the applicant’s proposed method of doing business;(3) the qualifications and business history of the applicant; in the case of a broker-dealer or investment adviser, the qualifications and business history of any partner, officer, or director, any person occupying a similar status or performing similar functions, or any person directly or indirectly controlling the broker-dealer or the investment adviser;(4) any injunction or administrative order or conviction of a misdemeanor involving a security or any aspect of the securities business and any conviction of a felony;(5) the applicant’s financial condition and history; and(6) any information to be furnished or disseminated to any client or prospective client, if the applicant is an investment adviser.
The secretary may by rule or order require an applicant for initial registration to publish an announcement of the application in 1 or more specified newspapers published in the commonwealth. If no denial order is in effect and no proceeding is pending under section 204, registration shall become effective at noon of the thirtieth day after an application is filed. The secretary may by rule or order specify an earlier effective date, and may by order defer the effective date until noon of the thirtieth day after the filing of any amendment. Registration of a broker-dealer or an investment adviser automatically constitutes registration of any agent or investment adviser representative, whichever is applicable, who is a partner, officer, or director, or a person occupying a similar status or performing similar functions. No person shall be designated as a partner, officer or director or a person occupying a similar status or performing similar functions, for the purpose of the automatic registration if the designation is solely for the purpose of avoiding registration as an agent or investment adviser representative.
(b) It is unlawful for a person to transact business in the commonwealth as a federal covered adviser unless the person has made a notice filing with the secretary or his designee consisting of (1) a copy of those documents that have been filed by the federal covered adviser with the Securities and Exchange Commission, (2) a consent to service of process, and (3) a filing fee, as the secretary prescribes by rule or order, not to exceed $300.
A notice filing shall be effective upon the receipt of a complete filing by the secretary or his designee. The notice filing shall expire annually on December 31 and may be renewed by filing those documents that have been filed with the SEC that the secretary prescribes by rule together with a filing fee of $300.
(c) (1) Broker-dealers and broker-dealer agents.
Every applicant for initial or renewal registration shall pay a registration fee, as the secretary prescribes by rule or order, not to exceed $300 in the case of a broker-dealer and not to exceed $50 in the case of an agent, including an agent automatically registered pursuant to paragraph (a). When an agent transfers an affiliation, the agent shall pay a fee, as the secretary prescribes by rule or order, not to exceed $50. Any person required to pay a fee under this section may transmit through any designee any fee required by this section or the rules promulgated under this section.
(2) Investment advisers and investment adviser representatives.
Every applicant for initial or renewal registration shall pay a registration fee, as the secretary prescribes by rule or order, not to exceed $300 in the case of an investment adviser and of $50 in the case of an investment adviser representative, including an investment adviser representative automatically registered pursuant to paragraph (a). When an investment adviser representative transfers an affiliation, the investment adviser representative shall pay a fee, as the secretary prescribes by rule or order, not to exceed $50.
(3) Federal covered advisers.
Every person acting as a federal covered adviser in the commonwealth shall pay an initial or renewal notice filing fee, as the secretary prescribes by rule or order, not to exceed $300.
(d) A registered broker-dealer, an investment adviser, or a federal covered adviser may file an application for registration of a successor, or file a notice filing for a successor, as applicable, whether or not the successor is then in existence, for the unexpired portion of the year. There shall be no filing fee.
(e) The secretary may, by rule or order, establish minimum financial requirements, including minimum capital and bonding requirements, for registered broker-dealers, subject to the limitations of section 15 of the Securities Exchange Act of 1934; and for investment advisers, subject to the limitations of section 222 of the Investment Advisers Act of 1940, which may include different requirements for those registered investment advisers who maintain custody of clients’ funds or securities, who have discretionary authority over same or who require payment of more than $500 in fees and more than 6 months in advance and those registered investment advisers who do not.
(f) The secretary may by rule provide that an applicant may submit 1 application for registration as both a broker-dealer agent and an investment adviser representative. Each applicant shall pay a registration fee, as the secretary prescribes by rule or order, not to exceed $50.
(4) Any fee that is required to be paid pursuant to this section or the accompanying regulations may be transmitted through a designee.
Chapter 110A: Section 203. Post-Registration Provisions Section 203. (a) Every registered broker-dealer and investment adviser shall make and keep accounts, correspondence, memoranda, papers, books, and other records as the secretary prescribes by rule or order, except as limited by section 15 of the Securities Exchange Act of 1934, in the case of a broker-dealer, and by section 222 of the Investment Advisers Act of 1940, in the case of an investment adviser. All records so required, with respect to an investment adviser, shall be preserved for such period as the secretary prescribes by rule or order.
(b) With respect to investment advisers, the secretary may require that certain information be furnished or disseminated as necessary or appropriate in the public interest or for the protection of investors and advisory clients. To the extent determined by the secretary in his discretion, information furnished to clients or prospective clients of an investment adviser that would be in compliance with the Investment Advisers Act of 1940 and the rules thereunder may be used in whole or partial satisfaction of this requirement. The secretary may by rule or order require that such material be filed.
(c) Every registered broker-dealer and investment adviser shall file such financial reports as the secretary may prescribe by rule or order, except as provided by section 15 of the Securities Exchange Act of 1934, in the case of a broker-dealer, and section 222 of the Investment Advisers Act of 1940, in the case of an investment adviser.
(d) If the information contained in any document filed with the secretary is or becomes inaccurate or incomplete in any material respect, the registrant or federal covered adviser shall file a correcting amendment promptly if the document is filed with respect to a registrant, or when the amendment is required to be filed with the Securities and Exchange Commission if the document is filed with respect to a federal covered adviser, unless notification of the correction has been given under subsection (b) of section 201.
(e) All the records referred to in subsection (a) are subject at any time or from time to time to such reasonable periodic, special, or other examinations by representatives of the secretary, within or without the commonwealth, as the secretary deems necessary or appropriate in the public interest or for the protection of investors. For the purpose of avoiding unnecessary duplication of examinations, the secretary, insofar as he deems it practicable in administering this subsection, may cooperate with the securities administrators of other states, the Securities and Exchange Commission, and any national securities exchange or national securities association registered under the Securities Exchange Act of 1934.
Chapter 110A: Section 203A. Document disclosing material facts Section 203A. (a) Each investment adviser registered under this chapter shall disseminate to each client or prospective client a document disclosing material facts. The document shall include information concerning:(1) compensation arrangements between the client and the investment adviser;(2) the nature of services offered;(3) business practices; and(4) methods for obtaining information on disciplinary history and registration of the investment adviser and persons associated with the investment adviser.
(b) Each investment adviser and each of its representatives registered under this chapter shall disclose to each client before a purchase or sale is effected on behalf of the client:(1) the total amount of sales commissions or other fees that may reasonably be expected to be charged or deducted in connection with the purchase or sale;(2) that the adviser will receive the amount or a portion of the amount, or, in the case of a transaction to be effected through a broker-dealer that is a person associated or under common control with the adviser, that the broker-dealer is affiliated with the adviser and will receive the amount or portion of the amount; and(3) the existence of any compensation arrangement with an issuer or other third party with respect to the recommended transaction.
The disclosure shall be in writing if the purchase or sale was recommended in writing. The secretary may, by rule, permit a client to waive in writing, the right to a disclosure.
Chapter 110A: Section 204. Denial, Revocation, Suspension, Cancellation, and Withdrawal of Registration Section 204. (a) The secretary may by order impose an administrative fine or censure or deny, suspend, or revoke any registration or take any other appropriate action if he finds (1) that the order is in the public interest and (2) that the applicant or registrant or, in the case of a broker-dealer or investment adviser, any partner, officer, or director, any person occupying a similar status or performing similar functions, or any person directly or indirectly controlling the broker-dealer or investment adviser:—(A) has filed an application for registration which as of its effective date, or as of any date after filing in the case of an order denying effectiveness, was incomplete in any material respect or contained any statement which was, in light of the circumstances under which it was made, false or misleading with respect to any material fact;(B) has willfully violated or willfully failed to comply with any provision of this chapter or a predecessor chapter or any rule or order under this chapter or a predecessor chapter;(C) has been convicted, within the past ten years, of any misdemeanor involving a security or any aspect of the securities business, or any felony;(D) is permanently or temporarily enjoined by any court of competent jurisdiction from engaging in or continuing any conduct or practice involving any aspect of the securities business;(E) is the subject of an order of the secretary denying, suspending or revoking registration as a broker-dealer, agent, investment adviser, or investment adviser representative;(F) is the subject of any of the following orders which are currently effective or which were issued within the last five years;(i) an order by the securities agency or administrator of another state, Canadian province or territory, or the Securities and Exchange Commission, entered after notice and opportunity for hearing, denying, suspending, or revoking the person’s license as a broker dealer, agent or investment advisor, or the substantial equivalent of those terms as defined in this chapter;(ii) a suspension or expulsion from membership in an association with a self regulatory organization registered under the Securities Exchange Act of 1934 or the Commodities Exchange Act;(iii) a United States Postal Service fraud order;(iv) a cease and desist order entered after notice and opportunity for hearing by the secretary or the securities agency or administrator of any other state, Canadian province or territory, the Securities and Exchange Commission, or the Commodity Futures Trading Commission; or(v) an order by the Commodity Futures Trading Commission denying, suspending, or revoking registration under the Commodity Exchange Act;(G) has engaged in any unethical or dishonest conduct or practices in the securities, commodities or insurance business;(H) is insolvent, either in the sense that his liabilities exceed his assets or in the sense that he cannot meet his obligations as they mature; but the secretary may not enter an order against a broker-dealer under this clause without a finding of insolvency as to the broker-dealer; or(I) is not qualified on the basis of such factors as training, experience, and knowledge of the securities business, except as otherwise provided in subsection (b).
The secretary may by order deny, suspend, or revoke any registration if he finds (1) that the order is in the public interest and (2) that the applicant or registrant(J) has failed reasonably to supervise agents, investment adviser representatives or other employees to assure compliance with this chapter; or:—(K) has failed to pay the proper filing fee; but the secretary may enter only a denial order under this clause, and he shall vacate any such order when the deficiency has been corrected.
The secretary may not institute a suspension or revocation proceeding on the basis of a fact or transaction known to him when registration became effective unless the proceeding is instituted within the next thirty days.
(b) The following provisions govern the application of section 204(a)(2)(I):(1) The secretary may not enter an order against a broker-dealer on the basis of the lack of qualification of any person other than (A) the broker-dealer himself if he is an individual or (B) an agent of the broker-dealer.
(2) The secretary may not enter an order against any investment adviser of the basis of the lack of qualification of any person other than (a) the investment adviser himself if he is an individual or (b) an investment adviser representative.
(3) The secretary may not enter an order solely on the basis of lack of experience if the applicant or registrant is qualified by training or knowledge or both.
(4) The secretary shall consider that an agent who will work under the supervision of a registered broker-dealer need not have the same qualifications as a broker-dealer and that an investment adviser representative who will work under the supervision of a registered investment adviser need not have the same qualifications as an investment adviser.
(5) The secretary may consider that a broker-dealer or an agent is not necessarily qualified to act in the capacity as an investment adviser solely on the basis of experience as an agent. When he finds that an applicant for initial or renewal registration as a broker-dealer or agent is not qualified to act in the capacity of an investment adviser, he may by order condition the applicant’s registration as a broker-dealer upon his not transacting the business of an investment adviser in this state.
(6) The secretary may by rule provide for an examination, which may be written or oral or both, to be taken by any class of or all applicants.
(c) The secretary may by order summarily postpone or suspend registration, pending final determination of any proceeding under this section. Upon the entry of the order, the secretary shall promptly notify the applicant or registrant, as well as the employer or prospective employer if the applicant or registrant is an agent or investment adviser representative, that it has been entered and of the reasons therefor and that within fifteen days after the receipt of a written request the matter will be set down for hearing. If a hearing is requested or ordered, the secretary, after notice of and opportunity for hearing, may modify or vacate the order or extend it until final determination.
(d) If the secretary finds that any registrant or applicant for registration is no longer in existence or has ceased to do business as a broker-dealer, agent, investment adviser or investment adviser representative, or is subject to an adjudication of mental incompetence or to the control of a committee, conservator, or guardian, or cannot be located after reasonable search, the secretary may by order cancel the registration or application.
(e) Withdrawal from registration as a broker-dealer, agent, investment adviser, or investment adviser representative shall become effective thirty days after receipt of an application to withdraw or within such shorter period of time as the secretary may determine, unless a revocation or suspension proceeding is pending when the application is filed or a proceeding to revoke or suspend or impose conditions upon withdrawal is instituted within thirty days after the application is filed. If a proceeding is pending or instituted, withdrawal becomes effective at such time and upon such conditions as the secretary by order determines. If no proceeding is pending or instituted and withdrawal automatically becomes effective, the secretary may nevertheless institute a revocation or suspension order proceeding under clause (B) of subsection (a) within one year after withdrawal became effective and enter a revocation or suspension order as of the last date on which registration was effective.
(f) No order may be entered under any part of this section except the first sentence of subsection (c) without (1) appropriate prior notice to the applicant or registrant as well as the employer or prospective employer if the applicant or registrant is an agent or investment adviser representative, (2) opportunity for hearing, and (3) written findings of fact and conclusions of law.
Chapter 110A: Section 301. Registration Requirement Section 301. It is unlawful for any person to offer or sell any security in the commonwealth unless:—(1) the security is registered under this chapter;(2) the security or transaction is exempted under section 402; or(3) the security is a federal covered security.
Chapter 110A: Section 302. Registration by Coordination Section 302. (a) Any security for which a registration statement has been filed under the Securities Act of 1933 in connection with the same offering may be registered by coordination.
(b) A registration statement under this section shall contain the following information and be accompanied by the following documents in addition to the information specified in section 304(c) and the consent to service of process required by section 414(g):(1) three copies of the latest form of prospectus filed under the Securities Act of 1933;(2) if the secretary by rule or otherwise requires, a copy of the articles of incorporation and by-laws, or their substantial equivalents, currently in effect, a copy of any agreements with or among underwriters, a copy of any indenture or other instrument governing the issuance of the security to be registered, and a specimen or copy of the security;(3) if the secretary requests, any other information, or copies of any other documents, filed under the Securities Act of 1933; and(4) an undertaking to forward all future amendments to the federal prospectus, other than an amendment which merely delays the effective date of the registration statement, promptly and in any event not later than the first business day after the day they are forwarded to or filed with the Securities and Exchange Commission, whichever first occurs.
(c) A registration statement under this section automatically becomes effective at the moment the federal registration statement becomes effective if all the following conditions are satisfied: (1) no stop order is in effect and no proceeding is pending under section 305; (2) the registration statement has been on file with the secretary for at least ten days; and (3) a statement of the maximum and minimum proposed offering prices and the maximum underwriting discounts and commissions has been on file for two full business days or such shorter period as the secretary permits by rule or otherwise and the offering is made within those limitations. The registrant shall promptly notify the secretary by telephone or telegram of the date and time when the federal registration statement became effective and the content of the price amendment, if any, and shall promptly file a post-effective amendment containing the information and documents in the price amendment. “Price amendment” means the final federal amendment which includes a statement of the offering price, underwriting and selling discounts or commissions, amount of proceeds, conversion rates, call prices, and other matters dependent upon the offering price. Upon failure to receive the required notification and post-effective amendment with respect to the price amendment, the secretary may enter a stop order, without notice or hearing, retroactively denying effectiveness to the registration statement or suspending its effectiveness until compliance with this subsection, if it promptly notifies the registrant by telephone or telegram, and promptly confirms by letter or telegram when it notifies by telephone, of the issuance of the order. If the registrant proves compliance with the requirements of this subsection as to notice and post-effective amendment, the stop order is void as of the time of its entry. The secretary may by rule or otherwise waive either or both of the conditions specified in clauses (2) and (3). If the federal registration statement becomes effective before all the conditions in this subsection are satisfied and they are not waived, the registration statement automatically becomes effective as soon as all the conditions are satisfied. If the registrant advises the secretary of the date when the federal registration statement is expected to become effective, the secretary shall promptly advise the registrant by telephone or telegram at the registrant’s expense, whether all the conditions are satisfied and whether it then contemplates the institution of a proceeding under section 305; but this advice by the secretary does not preclude the institution of such a proceeding at any time.
Chapter 110A: Section 303. Registration by Qualification Section 303. (a) Any security may be registered by qualification.
(b) A registration statement under this section shall contain the following information and be accompanied by the following documents in addition to the information specified in section 304(c) and the consent to service of process required by section 414(g):(1) with respect to the issuer and any significant subsidiary: its name, address, and form of organization; the state or foreign jurisdiction and date of its organization; the general character and location of its business; a description of its physical properties and equipment; and a statement of the general competitive conditions in the industry or business in which it is or will be engaged;(2) with respect to every director and officer of the issuer, or person occupying a similar status or performing similar functions: his name, address, and principal occupation for the past five years; the amount of securities of the issuer held by him as of a specified date within thirty days of the filing of the registration statement; the amount of the securities covered by the registration statement to which he has indicated his intention to subscribe; and a description of any material interest in any material transaction with the issuer or any significant subsidiary effected within the past three years or proposed to be effected;(3) with respect to persons covered by clause (2): the remuneration paid during the past twelve months and estimated to be paid during the next twelve months, directly or indirectly, by the issuer, together with all predecessors, parents, subsidiaries, and affiliates, to all those persons in the aggregate;(4) with respect to any person owning of record, or beneficiary if known, ten percent or more of the outstanding shares of any class of equity security of the issuer: the information specified in clause (2) other than his occupation;(5) with respect to every promoter if the issuer was organized within the past three years: the information specified in clause (2), any amount paid to him within that period or intended to be paid to him, and the consideration for any such payment;(6) with respect to any person on whose behalf any part of the offering is to be made in a non-issuer distribution: his name and address; the amount of securities of the issuer held by him as of the date of the filing of the registration statement; a description of any material interest in any material transaction with the issuer or any significant subsidiary effected within the past three years or proposed to be effected; and a statement of his reasons for making the offering;(7) the capitalization and long-term debt, on both a current and a pro forma basis, of the issuer and any significant subsidiary, including a description of each security outstanding or being registered or otherwise offered, and a statement of the amount and kind of consideration, whether in the form of cash, physical assets, services, patents, goodwill, or anything else, for which the issuer or any subsidiary has issued any of its securities within the past two years or is obligated to issue any of its securities;(8) the kind and amount of securities to be offered; the proposed offering price or the method by which it is to be computed; any variation therefrom at which any proportion of the offering is to be made to any person or class of persons other than the underwriters, with a specification of any such person or class; the basis upon which the offering is to be made if otherwise than for cash; the estimated aggregate underwriting and selling discounts or commissions and finders’ fees, including separately cash, securities, contracts, or anything else of value to accrue to the underwriters or finders in connection with the offering, or, if the selling discounts or commissions are variable, the basis of determining them and their maximum and minimum amounts; the estimated amounts of other selling expenses, including legal, engineering, and accounting charges; the name and address of every underwriter and every recipient of a finder’s fee; a copy of any underwriting or selling-group agreement pursuant to which the distribution is to be made, or the proposed form of any such agreement whose terms have not yet been determined; and a description of the plan of distribution of any securities which are to be offered otherwise than through an underwriter;(9) the estimated cash proceeds to be received by the issuer from the offering; the purposes for which the proceeds are to be used by the issuer; the amount to be used for each purpose; the order or priority in which the proceeds will be used for the purposes stated; the amounts of any funds to be raised from other sources to achieve the purposes stated; the sources of any such funds; and, if any part of the proceeds is to be used to acquire any property, including goodwill, otherwise than in the ordinary course of business, the names and addresses of the vendors, the purchase price, the names of any persons who have received commissions in connection with the acquisition, and the amounts of any such commissions and any other expense in connection with the acquisition, including the cost of borrowing money to finance the acquisition;(10) a description of any stock options or other security options outstanding, or to be created in connection with the offering, together with the amount of any such options held or to be held by every person required to be named in clause (2), (4), (5), (6), or (8) and by any person who holds or will hold ten percent or more in the aggregate of any such options;(11) the dates of, parties to, and general effect concisely stated of, every management or other material contract made or to be made otherwise than in the ordinary course of business if it is to be performed in whole or in part at or after the filing of the registration statement or was made within the past two years, together with a copy of every such contract; and a description of any pending litigation or proceeding to which the issuer is a party and which materially affects its business or assets, including any such litigation or proceeding known to be contemplated by governmental authorities;(12) a copy of any prospectus, pamphlet, circular, form letter, advertisement, or other sales literature intended as of the effective date to be used in connection with the offering;(13) a specimen or copy of the security being registered; a copy of the issuer’s articles of incorporation and by-laws, or their substantial equivalents, as currently in effect; and a copy of any indenture or other instrument covering the security to be registered;(14) a signed or confirmed copy of an opinion of counsel as to the legality of the security being registered, with an English translation if it is in a foreign language, which shall state whether the security when sold will be legally issued, fully paid, and non-assessable, and, if a debt security, a binding obligation of the issuer;(15) the written consent of any accountant, engineer, appraiser, or other person whose profession gives authority to a statement made by him, if any such person is named as having prepared or certified a report or valuation, other than a public and official document or statement, which is used in connection with the registration statement;(16) a balance sheet of the issuer as of a date within four months prior to the filing of the registration statement; a profit and loss statement and analysis of surplus for each of the three fiscal years preceding the date of the balance sheet and for any period between the close of the last fiscal year and the date of the balance sheet, or for the period of the issuer’s and any predecessors’ existence if less than three years; and, if any part of the proceeds of the offering is to be applied to the purchase of any business, the same financial statements which would be required if that business were the registrant; and(17) such additional information as the secretary requires by rule or order.
(c) A registration statement under this section becomes effective when the secretary so orders.
(d) The secretary may by rule or order require as a condition of registration under this section that a prospectus containing any designated part of the information specified in subsection (b) be sent or given to each person to whom an offer is made before or concurrently with (1) the first written offer made to him (otherwise than by means of a public advertisement) by or for the account of the issuer or any other person on whose behalf the offering is being made, or by any underwriter or broker-dealer who is offering part of an unsold allotment or subscription taken by him as a participant in the distribution, (2) the confirmation of any sale made by or for the account of any such person, (3) payment pursuant to any such sale, or (4) delivery of the security pursuant to any such sale, whichever first occurs.
Chapter 110A: Section 304. Provisions Applicable to Registration Generally Section 304. (a) A registration statement may be filed by the issuer, any other person on whose behalf the offering is to be made, or a registered broker-dealer.
(b) Every person filing a registration statement shall pay a filing fee to be determined annually by the commissioner of administration under the provision of section three B of chapter seven.
(c) Every registration statement shall specify (1) the amount of securities to be offered in this state; (2) the states in which a registration statement or similar document in connection with the offering has been or is to be filed; and (3) any adverse order, judgment, or decree entered in connection with the offering by the regulatory authorities in each state or by any court or the Securities and Exchange Commission.
(d) Any document filed under this chapter or a predecessor chapter may be incorporated by reference in the registration statement to the extent that the document is currently accurate.
(e) The secretary may by rule or otherwise permit the omission of any item of information or document from any registration statement.
(f) In the case of a non-issuer distribution, information may not be required under section 303 or 304(h) unless it is known to the person filing the registration statement or to the persons on whose behalf the distribution is to be made, or can be furnished by them without unreasonable effort or expense.
(g) Every registration statement is effective for one year from its effective date, or any longer period during which the security is being offered or distributed in a non-exempted transaction by or for the account of the issuer or other person on whose behalf the offering is being made or by any underwriter or broker-dealer who is still offering part of an unsold allotment or subscription taken by him as a participant in the distribution, except during the time a stop order is in effect under section 305. All outstanding securities of the same class as a registered security are considered to be registered for the purpose of any non-issuer transaction (1) so long as the registration statement is effective and (2) between the thirtieth day after the entry of any stop order suspending or revoking the effectiveness of the registration statement under section 305, if the registration statement did not relate in whole or in part to a non-issuer distribution, and one year from the effective date of the registration statement. A registration statement may not be withdrawn for one year from its effective date if any securities of the same class are outstanding. A registration statement may be withdrawn otherwise only in the discretion of the secretary.
(h) So long as a registration statement is effective, the secretary may by rule or order require the person who filed the registration statement to file reports, not more often than quarterly, to keep reasonably current the information contained in the registration statement and to disclose the progress of the offering.
(i) A registration statement relating to a security issued by a face-amount certificate company or a redeemable security issued by an open-end management company or unit investment trust, as those terms are defined in the Investment Company Act of 1940, may be amended after its effective date so as to increase the securities specified as proposed to be offered. Such an amendment becomes effective when the secretary so orders. Every person filing such an amendment shall pay a filing fee to be determined annually by the commissioner of administration under the provision of section three B of chapter seven.
Chapter 110A: Section 305. Denial, Suspension, and Revocation of Registration Section 305. (a) The secretary may issue a stop order denying effectiveness to, or suspending or revoking the effectiveness of, any registration statement if he finds (1) that the order is in the public interest and (2) that(A) the registration statement as of its effective date or as of any earlier date in the case of an order denying effectiveness, or any amendment under section 304(i) as of its effective date, or any report under section 304(h) is incomplete in any material respect or contains any statement which was, in the light of the circumstances under which it was made, false or misleading with respect to any material fact;(B) any provision of this chapter or any rule, order, or condition lawfully imposed under this chapter has been willfully violated, in connection with the offering, by (i) the person filing the registration statement, (ii) the issuer, any partner, officer, or director of the issuer, any person occupying a similar status or performing similar functions, or any person directly or indirectly controlling or controlled by the issuer, but only if the person filing the registration statement is directly or indirectly controlled by or acting for the issuer, or (iii) any underwriter;(C) the security registered or sought to be registered is the subject of an administrative stop order or similar order or a permanent or temporary injunction of any court of competent jurisdiction entered under any other federal or state act applicable to the offering; but (i) the secretary may not institute a proceeding against an effective registration statement under clause (C) more than one year from the date of the order or injunction relied on, and (ii) he may not enter an order under clause (C) on the basis of an order or injunction entered under any other state act unless that order or injunction was based on facts which would currently constitute a ground for a stop order under this section;(D) the issuer’s enterprise or method of business includes or would include activities which are illegal where performed;(E) the offering has worked or tended to work a fraud upon purchasers or would so operate;(F) the offering has been or would be made with unreasonable amounts of underwriters’ and sellers’ discounts, commissions, or other compensation, or promoters’ profits or participation, or unreasonable amounts or kinds of options;(G) when a security is sought to be registered by coordination, there has been a failure to comply with the undertaking required by section 302(b)(4); or(H) the applicant or registrant has failed to pay the proper filing fee; but the secretary may enter only a denial order under this clause and he shall vacate any such order when the deficiency has been corrected.
The secretary may not institute a stop-order proceeding against an effective registration statement on the basis of a fact or transaction known to him when the registration statement became effective unless the proceeding is instituted within the next thirty days.
(b) The secretary may by order summarily postpone or suspend the effectiveness of the registration statement pending final determination of any proceeding under this section. Upon the entry of the order, the secretary shall promptly notify each person specified in subsection (c) that it has been entered and of the reasons therefor and that within fifteen days after the receipt of a written request the matter will be set down for hearing. If no hearing is requested and none is ordered by the secretary, the order will remain in effect until it is modified or vacated by the secretary. If a hearing is requested or ordered, the secretary, after notice of and opportunity for hearing to each person specified in subsection (c), may modify or vacate the order or extend it until final determination.
(c) No stop order may be entered under any part of this section except the first sentence of subsection (b) without (1) appropriate prior notice to the applicant or registrant, the issuer, and the person on whose behalf the securities are to be or have been offered, (2) opportunity for hearing, and (3) written findings of fact and conclusions of law.
(d) The secretary may vacate or modify a stop order if he finds that the conditions which prompted entry have changed or that it is otherwise in the public interest to do so.
Chapter 110A: Section 306. Federal covered securities Section 306. (a) Covered securities under section 18(b)(2) of the Securities Act of 1933.
(1) Any security that is a federal covered security under section 18(b)(2) of the Securities Act of 1933 may be offered for sale and sold into, from, or within the commonwealth upon the secretary’s receipt of: a copy of the registration statement filed with the Securities and Exchange Commission or, in lieu of filing such registration statement, a notice as prescribed by the secretary by rule or order; a consent to service of process; and a fee of $750 for a unit investment trust or $2,000 for all other investment companies.
(2) Except as otherwise provided herein for unit investment trusts, unless otherwise extended by the secretary by rule or order, an initial notice filing under this section shall be effective commencing upon the later of the date the notice or registration statement, as applicable, is received by the secretary or the date the offering is effective with the Securities and Exchange Commission, until 2 months following the end of the issuer’s fiscal year. A notice filing may be renewed by filing, prior to the expiration of an effective notice filing, a renewal notice as prescribed by the secretary together with a renewal fee of $1,000. A renewal notice filing shall be effective until 2 months following the end of the issuer’s next fiscal year. A notice filing by a unit investment trust shall be effective for a period determined by the secretary by rule or order.
(3) A notice filing may be amended as provided by the secretary by rule or order.
(4) A notice filing may be terminated by an issuer upon providing the secretary a notice as the secretary may require by rule or order.
(b) Covered Securities under section 18(b)(4)(D) of the Securities Act of 1933.
The secretary may, by rule or order, require the issuer of any security that is a federal covered security under section 18(b)(4)(D) of the Securities Act of 1933 to file, no later than 15 days after the first sale in this commonwealth of such federal covered security, the following:(1) a notice on Securities and Exchange Commission Form D;(2) a consent to service of process signed by the issuer; and(3) any fees required by the secretary.
(c) Covered Securities under sections 18(b)(3) and 18(b)(4)(A)-(C) of the Securities Act of 1933.
The secretary, by rule or order, may require the filing of any document filed with the Securities and Exchange Commission under the Securities Act of 1933 together with annual or periodic reports of the value of securities sold or offered to be sold to persons located in this commonwealth for any security that is a federal covered security under section 18(b)(3) or (4)(A)-(C) of the Securities Act of 1933, together with a consent to service of process and any fees required by the secretary.
(d) Suspension Order.
The secretary may issue a stop order suspending the offer and sale of a federal covered security, except a federal covered security under section 18(b)(1) of the Securities Act of 1933, if he finds that:—(1) the order is in the public interest and(2) there is a failure to comply with any condition established under this section or any rule or order adopted hereunder.
(e) Preservation of Fraud Authority.
Consistent with section 18(c)(1) of the Securities Act of 1933, the secretary retains jurisdiction under the laws of the commonwealth, including this chapter, to investigate and bring enforcement actions with respect to fraud or deceit, or unlawful conduct by a broker or dealer, in connection with covered securities or transactions in covered securities.
(f) Waiver.
The secretary, by rule or order, may waive any or all of the provisions of this section.
Chapter 110A: Section 401. Definitions Section 401. When used in this chapter, unless the context otherwise requires:(a) “Secretary” means the state secretary or the secretary of the commonwealth.
(b) “Agent” means any individual other than a broker-dealer who represents a broker-dealer or issuer in effecting or attempting to effect purchases or sales of securities. “Agent” shall not include an individual who represents:(1) an issuer in:(A) effecting transactions in a security exempted by clause (1), (2), (3), (10) or (11) of subsection (a) of section 402;(B) effecting transactions exempted by subsection (b) of said section 402;(C) effecting transactions in a federal covered security as described in section 18(b)(3) and 18(b)(4)(D) of the Securities Act of 1933;(D) effecting transactions with existing employees, partners or director of the issuer if no commission or other remuneration is paid or given directly or indirectly for soliciting any person in the commonwealth; or(2) a broker-dealer in effecting transactions in the commonwealth limited to those transactions described in section 15(h)(2) of the Securities Exchange Act of 1934.
A partner, officer, or director of a broker-dealer or issuer, or a person occupying a similar status or performing similar functions, is an agent only if he otherwise comes within this definition.
(c) “Broker-dealer” means any person engaged in the business of effecting transactions in securities for the account of others or for his own account. “Broker-dealer” shall not include:(1) an agent;(2) an issuer;(3) a bank, savings institution, trust company, or the Central Credit Union Fund, Inc.
, established by chapter 216 of the acts of 1932; or(4) a person who has no place of business in the commonwealth if:(A) he effects transactions in the commonwealth exclusively with or through:(i) the issuers of the securities involved in the transactions;(ii) other broker-dealers; or(iii) banks, savings institutions, trust companies, insurance companies, investment companies as defined in the Investment Company Act of 1940, pension or profit sharing trusts, or other financial institutions or institutional buyers, whether acting for themselves or as trustees; or(B) during any period of 12 consecutive months he does not direct more than 15 offers to sell or buy into the commonwealth in any manner to persons other than those specified in clause (A), whether or not the offeror or any of the offerees is then present in the commonwealth.
(d) “Fraud,” “deceit,” and “defraud” are not limited to common-law deceit.
(e) “Guaranteed” means guaranteed as to payment of principal, interest, or dividends.
(f) “Issuer” means any person who issues or proposes to issue any security, except that (1) with respect to certificates of deposit, voting-trust certificates, or collateral-trust certificates, or with respect to certificates of interest or shares in an unincorporated investment trust not having a board of directors or persons performing similar functions or of the fixed, restricted management, or unit type, the term “issuer” means the person or persons performing the acts and assuming the duties of depositor or manager pursuant to the provisions of the trust or other agreement or instrument under which the security is issued; and (2) with respect to certificates of interest or participation in oil, gas, or mining titles or leases or in payments out of production under such titles or leases, there is not considered to be any “issuer.
”(g) “Non-issuer” means not directly or indirectly for the benefit of the issuer.
(h) “Person” means an individual, a corporation, a partnership, an association, a joint-stock company, a trust where the interests of the beneficiaries are evidenced by a security, an unincorporated organization, a limited liability company, a limited liability partnership, a government, or a political subdivision of a government.
(i) (1) “Sale” or “sell” includes every contract of sale of, contract to sell, or disposition of, a security or interest in a security for value.
(2) “Offer” or “offer to sell” includes every attempt or offer to dispose of, or solicitation of an offer to buy, a security or interest in a security for value.
(3) Any security given or delivered with, or as a bonus on account of, any purchase of securities or any other thing is considered to constitute part of the subject of the purchase and to have been offered and sold for value.
(4) A purported gift of assessable stock is considered to involve an offer and sale.
(5) Every sale or offer of a warrant or right to purchase or subscribe to another security of the same or another issuer, as well as every sale or offer of a security which gives the holder a present or future right or privilege to convert into another security of the same or another issuer, is considered to include an offer of the other security.
(6) The terms defined in this subsection do not include (A) any bona fide pledge or loan; (B) any stock dividend, whether the corporation distributing the dividend is the issuer of the stock or not, if nothing of value is given by stockholders for the dividend other than the surrender of a right to a cash or property dividend when each stockholder may elect to take the dividend in cash or property or in stock; (C) any act incident to a class vote by stockholders, pursuant to the certificate of incorporation or the applicable corporation statute, on a merger, consolidation, reclassification of securities, or sale of corporate assets in consideration of the issuance of securities of another corporation; or (D) any act incident to a reorganization in which a security is issued in exchange for one or more outstanding securities, claims, or property interests, or partly in such exchange and partly for cash, if the terms and conditions of the issuance and exchange are approved, after a hearing upon their fairness at which all persons to whom it is proposed to issue securities in the exchange have the right to appear, by any court, any official or agency of the United States, or any state authority expressly authorized by law to grant such approval.
(j) “Securities Act of 1933”, “Securities Exchange Act of 1934”, “Public Utility Holding Company Act of 1935”, “Investment Advisers Act of 1940” and “Investment Company Act of 1940” mean the federal statutes of those names as amended before or after the effective date of this chapter.
(k) “Security” means any note; stock; treasury stock; bond; debenture; evidence of indebtedness; certificate of interest or participation in any profit-sharing agreement; collateral-trust certificate; preorganization certificate or subscription; transferable share; investment contract; voting-trust certificate; certificate of deposit for a security; certificate of interest or participation in an oil, gas, or mining title or lease or in payments out of production under such a title or lease; or, in general, any interest or instrument commonly known as a “security,” or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing. “Security” does not include any insurance or endowment policy or annuity contract under which an insurance company promises to pay money either in a lump sum or periodically for life or some other specified period.
(l) “State” means any state, territory, or possession of the United States, the District of Columbia, and Puerto Rico.
(m) “Investment adviser” means any person who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to value of securities or as to the advisability of investing in, purchasing, or selling securities, or who, for compensation and as a part of a regular business, issues or promulgates analyses or reports concerning securities. “Investment adviser” also includes financial planners and other persons who, as an integral component of other financially related services, provide the foregoing investment advisory services to others for compensation and as a part of a business or who hold themselves out as providing the foregoing investment advisory services to others for compensation. “Investment adviser” shall not include:(1) (A) an investment adviser representative;(B) a bank, savings institution, or trust company;(C) a lawyer, accountant, engineer, or teacher whose performance of these services is solely incidental to the practice of his profession, or who does not exercise investment discretion with respect to the assets of clients or maintain custody of the assets of clients for the purpose of investing such assets, except when the person is acting as a bona fide fiduciary in a capacity, such as an executor, trustee, personal representative, estate or trust agent, guardian, conservator, or person serving in a similar fiduciary capacity; and who does not accept or receive, directly or indirectly, any commission, fee or other remuneration contingent upon the purchase or sale of any specific security by a client of such persons;(D) a publisher of any newspaper, news column, newsletter, news magazine, or business or financial publication or service whether communicated in hard copy form, or by electronic means, or otherwise, that does not consist of the rendering of advice on the basis of the specific investment situation of each client;(E) a person whose only clients in this state are federal covered advisers, other investment advisers, broker-dealers, banks, savings institutions, trust companies, insurance companies, investment companies as defined in the Investment Company Act of 1940, employee benefit plans with assets of not less than $5,000,000, governmental agencies or instrumentalities, or other financial institutions or institutional buyers, whether acting for themselves or as trustees with investment control;(F) a registered broker-dealer or broker-dealer agent;(G) a person who has no place of business in the commonwealth and who during the preceding 12 month period has had fewer than 6 clients, other than those listed in clause (E), who are residents of the commonwealth; and(H) other persons not within the intent of this subsection as the secretary may by rule or order designate; or(2) a federal covered adviser.
(n) “Investment adviser representative” means any partner, officer, director, or a person occupying a similar status or performing similar functions, or other individual, except clerical or ministerial personnel, who is employed by or associated with:(A) an investment adviser that is registered or required to be registered under this act, and who does any of the following:(i) makes any recommendations or otherwise renders advice regarding securities;(ii) manages accounts or portfolios of clients;(iii) determines which recommendation or advice regarding securities should be given;(iv) solicits, offers or negotiates for the sale of or sells investment advisory services;(v) supervises employees who perform any of the foregoing; or(B) a federal covered adviser, subject to the limitations of section 203A of the Investment Advisers Act of 1940.
“Investment adviser representative” does not include such other persons employed by or associated with either an investment adviser or a federal covered adviser not within the intent of this subsection as the secretary may designate by rule or order.
(o) “Federal covered adviser” means a person who is registered with the Securities and Exchange Commission under section 203 of the Investment Advisers Act of 1940. “Federal covered adviser” shall not include any person who is excluded from the definition of “investment adviser” pursuant to clauses (A) to (G), inclusive, of paragraph (1) of subsection (m).
(p) “Federal covered security” means any security that is a covered security under section 18(b) of the Securities Act of 1933 or the regulations promulgated thereunder.
Chapter 110A: Section 402. Exemptions Section 402. (a) The following securities are exempted from sections 301, 306 and 403:(1) any security, including a revenue obligation, issued or guaranteed by the United States, any state, including this commonwealth, any political subdivision of a state, or any agency or corporate or other instrumentality of 1 or more of the foregoing or any certificate of deposit for any of the foregoing.
(2) any security other than a revenue obligation issued or guaranteed by Canada, any Canadian province, any political subdivision of any such province, any agency or corporate or other instrumentality of one or more of the foregoing, or any other foreign government with which the United States currently maintains diplomatic relations if the security is recognized as a valid obligation by the issuer or guarantor;(3) any security issued by and representing an interest in or a debt of, or guaranteed by, any bank organized under the laws of the United States, or any bank, savings institution, or trust company organized and supervised under the laws of any state;(4) any security issued by and representing an interest in or a debt of, or guaranteed by, any federal savings and loan association, or any building and loan or similar association organized under the laws of any state and authorized to do business in this commonwealth, or any corporation licensed to make small loans and subject to regulation by the commissioner of banks under chapter one hundred and forty;(5) any security issued by and representing an interest in or a debt of, or guaranteed by, any insurance company organized under the laws of any state and authorized to do business in this commonwealth;(6) any security issued or guaranteed by any federal credit union or any credit union, industrial loan association, or similar association organized and supervised under the laws of this commonwealth;(7) any security issued or guaranteed by any railroad, other common carrier, public utility, or holding company which is (A) subject to the jurisdiction of the Interstate Commerce Commission; (B) a registered holding company under the Public Utility Holding Company Act of 1935 or a subsidiary of such a company within the meaning of that act; (C) regulated in respect of its rates and charges by a governmental authority of the United States or any state; or (D) regulated in respect of the issuance or guarantee of the security by a governmental authority of the United States, any state, Canada, or any Canadian province;(8) any security that is listed or approved for listing upon notice of issuance on the American Stock Exchange, the Boston Stock Exchange, the Chicago Stock Exchange, the New York Stock Exchange, the Pacific Stock Exchange, or any other stock exchange specified by the secretary; any other security of the same issuer which is of senior or substantially equal rank; any security called for by subscription rights or warrants so listed or approved; or any warrant or right to purchase or subscribe to any of the foregoing;.
(9) any security issued by any person organized and operated not for private profit but exclusively for religious, educational, benevolent, charitable, fraternal, social, athletic, or reformatory purposes, or as a chamber of commerce or trade or professional association;(10) any commercial paper which arises out of a current transaction or the proceeds of which have been or are to be used for current transactions, and which evidences an obligation to pay cash within nine months of the date of issuance, exclusive of days of grace, or any renewal of such paper which is likewise limited, or any guarantee of such paper or of any such renewal;(11) any investment contract issued in connection with an employees’ stock purchase, savings, pension, profit-sharing, or similar benefit plan if the secretary is notified in writing thirty days before the inception of the plan or, with respect to plans which are in effect on the effective date of this chapter, within sixty days thereafter, or within thirty days before they are reopened if they are closed on the effective date of this chapter;(12) any security issued by a cooperative corporation organized under chapter one hundred and fifty-seven or organized under chapter one hundred and fifty-seven A if (A) its authorized capital stock does not exceed fifty thousand dollars and (B) no expenditure is made by or on its behalf in connection with the issuance or sale of its securities other than the actual expenses of organization, calling or holding meetings of incorporators or shareholders, printing, mailing, and taxes.
(b) The following transactions are exempted from sections 301, 306 and 403:(1) any isolated non-issuer transaction, whether effected through a broker-dealer or not;(2) any non-issuer transaction;(A) by a registered agent of a registered broker-dealer, and any resale transaction by a sponsor of a unit investment trust registered under the Investment Company Act of 1940, in a security of a class that has been outstanding in the hands of the public for at least 90 days provided, at the time of the transaction:(i) the issuer of the security is actually engaged in business and not in the organizational stage or in bankruptcy or receivership and is not a blank check, blind pool or shell company whose primary plan of business is to engage in a merger or combination of the business with, or an acquisition of, an unidentified person or persons;(ii) the security is sold at a price reasonably related to the current market price of the security;(iii) the security does not constitute the whole or part of an unsold allotment to, or a subscription or participation by, the broker-dealer as an underwriter of the security;(iv) a nationally recognized securities manual designated by rule or order of the secretary or a document filed with the U.
S. Securities & Exchange Commission hereinafter referred to as SEC which is publicly available through the SEC’s Electronic Data Gathering and Retrieval System and contains:(a) a description of the business and operations of the issuer;(b) the names of the issuer’s officers and the names of the issuer’s directors, if any, or, in the case of a non-U.
S. issuer, the corporate equivalents of such persons in the issuer’s country of domicile;(c) an audited balance sheet of the issuer as of a date within 18 months, or in the case of a reorganization or merger where parties to the reorganization or merger had such audited balance sheets, a pro forma balance sheet; and(d) an audited income statement for each of the issuer’s immediately preceding 2 fiscal years, or for the period of existence of the issuer, if in existence for less than 2 years or, in the case of a reorganization or merger where the parties to the reorganization or merger had such audited income statements, a pro forma income statement; and(v) the issuer of the security has a class of equity securities listed on a national securities exchange registered under the Securities Exchange Act of 1934, or designated for trading on the National Association of Securities Dealers Automated Quotation System, unless:(a) the issuer of the security is a unit investment trust registered under the Investment Company Act of 1940; or(b) the issuer of the security has been engaged in continuous business, including predecessors, for at least 3 years; or(c) the issuer of the security has total assets of at least $2,000,000 based on an audited balance sheet as of a date within 18 months or, in the case of a reorganization or merger where parties to the reorganization or merger had such audited balance sheets, a pro forma balance sheet; or(B) in a security by a registered agent of a registered broker-dealer if:(i) the issuer of the security is actually engaged in business and not in the organizational stage or in bankruptcy or receivership and is not a blank check, blind pool or shell company whose primary plan of business is to engage in a merger or combination of the business with, or an acquisition of, an unidentified person or persons; and(ii) the security is senior in rank to the common stock of the issuer both as to payment of dividends or interest and upon dissolution or liquidation of the issuer and such security has been outstanding at least 3 years and the issuer or any predecessors has not defaulted within the current fiscal year or the 3 immediately preceding fiscal years in the payment of any dividend, interest, principal, or sinking fund installment on the security when due and payable; or(C) in an outstanding security if the issuer of the security has a class of securities subject to registration under section 12 of the Securities Exchange Act of 1934 and has been subject to the reporting requirements of section 13 or 15(d) of the Securities Exchange Act of 1934 for not less than 180 days before the transaction; or has a class of securities registered under the Investment Company Act of 1940; or has filed and maintained with the secretary for not less than 180 days before the transaction information substantially comparable to the information which the issuer would be required to file under section 12(b) or section 12(g) of the Securities Exchange Act of 1934 were the issuer to have a class of its securities registered under section 12 of the Securities Exchange Act of 1934, in such form as the secretary by rule provides; or(D) in a federal covered security pursuant to section 18(b)(4)(a) of the Securities Act of 1933 or the regulations promulgated thereunder.
(3) any non-issuer transaction effected by or through a registered broker-dealer pursuant to an unsolicited order or offer to buy; but the secretary may by rule require that the customer acknowledge upon a specified form that the sale was unsolicited, and that a signed copy of each such form be preserved by the broker-dealer for a specified period;(4) any transaction between the issuer or other person on whose behalf the offering is made and an underwriter, or among underwriters;(5) any transaction in a bond or other evidence of indebtedness secured by a real or chattel mortgage or deed of trust, or by an agreement for the sale of real estate or chattels, if the entire mortgage, deed of trust, or agreement, together with all the bonds or other evidences of indebtedness secured thereby, is offered and sold as a unit;(6) any transaction by an executor, administrator, sheriff, marshal, receiver, trustee in bankruptcy, guardian, or conservator;(7) any transaction executed by a bona fide pledgee without any purpose of evading this chapter;(8) any offer or sale to a bank, savings institution, trust company, insurance company, investment company as defined in the Investment Company Act of 1940, pension or profitsharing trust, or other financial institution or institutional buyer, or to a broker-dealer, whether the purchaser is acting for itself or in some fiduciary capacity;(9) any transaction pursuant to an offer directed by the offeror to not more than 25 persons other than those designated in clause (8) in the commonwealth during any period of 12 consecutive months, whether or not the offeror or any of the offerees is then present in the commonwealth, if: (A) the seller reasonably believes that all the buyers in the commonwealth, other than those designated in said clause (8), are purchasing for investment, and (B) insofar as an offer involves the payment directly or indirectly of any commission or other remuneration for soliciting any prospective buyer in the commonwealth, other than those designated in said clause (8), a notice is filed with the secretary at least 5 full business days before the offer, and the secretary does not by order disallow the exemption within the next 5 full business days; but, in any event, the secretary may by rule or order, as to any security or transaction or any type of security or transaction, withdraw or further condition this exemption, or increase or decrease the number of offerees permitted, or waive the conditions in subclauses (A) and (B) with or without the substitution of a limitation on remuneration.
(10) any offer or sale of a preorganization certificate or subscription if (A) no commission or other remuneration is paid or given directly or indirectly for soliciting any prospective subscriber, (B) the number of subscribers does not exceed ten, and (C) no payment is made by any subscriber;(11) any transaction pursuant to an offer to existing security holders of the issuer, including persons who at the time of the transaction are holders of convertible securities, nontransferable warrants, or transferable warrants exercisable within not more than ninety days of their issuance, if (A) no commission or other remuneration, other than a standby commission, is paid or given directly or indirectly for soliciting any security holder in this commonwealth, or (B) the issuer first files a notice specifying the terms of the offer and the secretary does not by order disallow the exemption within the next five full business days;(12) any offer, but not a sale, of a security for which registration statements have been filed under both this chapter and the Securities Act of 1933 if no stop order or refusal order is in effect and no public proceeding or examination looking toward such an order is pending under such chapter or act;(13) any other transaction that the secretary by rule or order may exempt, conditionally or unconditionally, on a finding that registration is not necessary or appropriate in the public interest or for the protection of investors.
(c) The secretary may by order deny or revoke any exemption specified in clause (9) or (11) of subsection (a) or in subsection (b) with respect to a specific security or transaction. No such order may be entered without appropriate prior notice to all interested parties, opportunity for hearing, and written findings of fact and conclusions of law, except that the secretary may by order summarily deny or revoke any of the specified exemptions pending final determination of any proceeding under this subsection. Upon the entry of a summary order, the secretary shall promptly notify all interested parties that it has been entered and of the reasons therefor and that within fifteen days of the receipt of a written request the matter will be set down for hearing. If no hearing is requested and none is ordered by the secretary, the order will remain in effect until it is modified or vacated by the secretary. If a hearing is requested or ordered, the secretary, after notice of and opportunity for hearing to all interested persons, may modify or vacate the order or extend it until final determination. No order under this subsection may operate retroactively. No person may be considered to have violated section 301 or 403 by reason of any offer or sale effected after the entry of an order under this subsection if he sustains the burden of proof that he did not know, and in the exercise of reasonable care could not have known, of the order.
(d) In any proceeding under this chapter, the burden of proving an exemption or an exception from a definition is upon the person claiming it.
Chapter 110A: Section 403. Filing of Sales and Advertising Literature Section 403. The secretary by rule or order may require the filing of any prospectus, pamphlet, circular, form letter, advertisement, or other sales literature or advertising communication addressed or intended for distribution to prospective investors, unless the security or transaction is exempted by section 402 or is a federal covered security. A rule or order relating to any security including a revenue obligation issued or guaranteed by the commonwealth or any political subdivision thereof or any agency or corporate or other instrumentality of one or more of the foregoing or any certificate of deposit for any of the foregoing may require the issuer thereof to file sales literature, but no such rule or order shall require sales literature to be prepared or require affirmative approval or filing of sales literature before it is used or require issuers located outside the commonwealth to file any literature; nor shall violation of any such rule or order be subject to the penalties provided by paragraph (a) of section 409.
Chapter 110A: Section 404. Misleading Filings Section 404. It is unlawful for any person to make or cause to be made, in any document filed with the secretary or in any proceeding under this chapter, any statement which is, at the time and in the light of the circumstances under which it is made, false or misleading in any material respect.
Chapter 110A: Section 405. Unlawful Representations Concerning Registration or Exemption Section 405. (a) Neither (1) the fact that an application for registration under Part II or a registration statement under Part III has been filed nor (2) the fact that a person or security is effectively registered constitutes a finding by the secretary that any document filed under this chapter is true, complete, and not misleading. Neither any such fact nor the fact that an exemption or exception is available for a security or a transaction means that the secretary has passed in any way upon the merits or qualifications of, or recommended or given approval to, any person, security, or transaction.
(b) It is unlawful to make, or cause to be made, to any prospective purchaser, customer, or client any representation inconsistent with subsection (a).
Chapter 110A: Section 406. Administration of Chapter Section 406. (a) This chapter shall be administered by the secretary.
(b) It is unlawful for the secretary or any of his officers or employees to use for personal benefit any information which is filed with or obtained by the secretary and which is not made public. No provision of this chapter authorizes the secretary or any of his officers or employees to disclose any such information except among themselves or when necessary or appropriate in a proceeding or investigation under this chapter. No provision of this chapter either creates or derogates from any privilege which exists at common law or otherwise when documentary or other evidence is sought under a subpoena directed to the secretary or any of his officers or employees.
(c) Every person who takes an examination under paragraph (6) of subsection (b) of section 204 shall pay whatever fee the secretary by rule specifies.
Chapter 110A: Section 407. Investigations and Subpoenas Section 407. (a) The secretary in his discretion (1) may make such public or private investigations within or outside of the commonwealth as he deems necessary to determine whether any person has violated or is about to violate any provision of this chapter or any rule or order hereunder, or to aid in the enforcement of this chapter or in the prescribing of rules and forms hereunder, (2) may require or permit any person to file a statement in writing, under oath or otherwise as the secretary determines, as to all the facts and circumstances concerning the matter to be investigated, and (3) may publish information concerning any violation of this chapter or any rule or order hereunder.
(b) For the purpose of any investigation or proceeding under this chapter, the secretary or any officer designated by him may administer oaths and affirmations, subpoena witnesses, compel their attendance, take evidence, and require the production of any books, papers, correspondence, memoranda, agreements, or other documents or records which the secretary deems relevant or material to the inquiry.
(c) In case of contumacy by, or refusal to obey a subpoena issued to, any person, the superior court for the county in which the person is found or is an inhabitant or transacts business, upon application by the secretary, may issue to the person an order requiring him to appear before the secretary, or the officer designated by him, there to produce documentary evidence if so ordered or to give evidence touching the matter under investigation or in question. Failure to obey the order of the court may be punished by the court as a contempt of court.
(d) No person is excused from attending and testifying or from producing any document or record before the secretary, or in obedience to the subpoena of the secretary or any officer designated by him, or in any proceeding instituted by the secretary, on the ground that the testimony or evidence, documentary or otherwise, required of him may tend to incriminate him or subject him to a penalty of forfeiture; but no individual may be prosecuted or subjected to any penalty or forfeiture for or on account of any transaction, matter, or thing concerning which he is compelled, after claiming his privilege against self-incrimination, to testify or produce evidence, documentary or otherwise, except that the individual testifying is not exempt from prosecution and punishment for perjury or contempt committed in testifying.
Chapter 110A: Section 407A. Violations; Cease and Desist Orders; Costs Section 407A. (a) If the secretary determines, after notice and opportunity for hearing, that any person has engaged in or is about to engage in any act or practice constituting a violation of any provision of this chapter or any rule or order issued thereunder, he may order such person to cease and desist from such unlawful act or practice and may take such affirmative action, including the imposition of an administrative fine, the issuance of an order for an accounting, disgorgement or rescission or any other such relief as in his judgment may be necessary to carry out the purposes of this chapter. No administrative fine imposed pursuant to this chapter shall exceed $25,000 for each violation and any fine collected shall be deposited in the Worker and Small Investor Protection Fund, established by section 68 of chapter 10.
(b) If the secretary makes written findings of fact that the public interest will be irreparably harmed by delay in issuing an order under subsection (a), the secretary may issue a temporary cease and desist order. Upon the entry of a temporary cease and desist order, the secretary shall promptly notify in writing the person subject to the order that such order has been entered, the reasons therefor, and that within twenty days after the receipt of a written request from such person the matter shall be set down for hearing to determine whether or not the order shall become permanent and final. If no hearing is requested and none is ordered by the secretary, the order shall remain in effect until it is modified or vacated by the secretary. If a hearing is requested or ordered, the secretary, after giving notice of and opportunity for a hearing to the person subject to the order, shall by written findings of fact and conclusions of law, vacate, modify, or make permanent the order.
(c) No order under this section, except an order issued pursuant to subsection (b), may be entered without prior notice of and opportunity for hearing. The secretary may vacate or modify an order under this section upon his finding that the conditions which required such an order have changed and that it is in the public interest to so vacate or modify.
An order issued pursuant to the provisions of this section shall be subject to review as provided in section four hundred and eleven.
(d) A registrant, applicant for registration, issuer or other person upon whom the secretary has conducted an examination, audit, investigation or adjudicatory proceeding who has been found to have violated the provisions of this chapter shall pay for all the costs incurred in the conduct of such examination, audit, investigation or proceeding. Such costs shall include, but not be limited to, the salaries and other compensation paid to clerical, administrative, investigative and legal personnel of the secretary in the conduct of such examination, audit, investigation or adjudicatory proceeding.
Chapter 110A: Section 408. Injunctions Section 408. Whenever it appears to the secretary that any person has engaged or is about to engage in any act or practice constituting a violation of any provision of this chapter or any rule or order hereunder, he may in his discretion bring an action in the superior court for the county in which the person is found or is an inhabitant or transacts business to enjoin the acts or practices and to enforce compliance with this chapter or any rule or order hereunder. Upon a proper showing, the court may grant a preliminary or permanent injunction or a temporary restraining order and may order an accounting, disgorgement, rescission and such other relief as may be in the public interest, including but not limited to the appointment of a receiver or conservator for the defendant or the defendant’s assets. The court may not require the secretary to post a bond.
Chapter 110A: Section 409. Criminal Penalties Section 409. (a) Any person who willfully violates any provision of this chapter except section 404, or who willfully violates any rule or order under this chapter, or who willfully violates section 404 knowing the statement made to be false or misleading in any material respect, shall upon conviction be fined not more than $100,000 or imprisoned not more than 10 years in the state prison, or both; but no person may be imprisoned for the violation of any rule or order if he proves that he had no knowledge of the rule or order.
Fines collected under this subsection shall be immediately sent to the state treasurer for deposit in the Securities Fraud Prosecution Fund, established by section 69 of chapter 10.
(b) The secretary may refer such evidence as is available concerning violations of this chapter or of any rule or order hereunder to the attorney general, who may, with or without such a reference, institute the appropriate criminal proceedings under this chapter.
(c) Nothing in this chapter limits the power of the commonwealth to punish any person for any conduct which constitutes a crime by statute or at common law.
Chapter 110A: Section 410. Civil Liabilities Section 410. (a) Any person who(1) offers or sells a security in violation of section 201(a), 301, or 405(b), or of any rule or order under section 403 which requires the affirmative approval of sales literature before it is used, or of any condition imposed under section 303(d), or(2) offers or sells a security by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading, the buyer not knowing of the untruth or omission, and who does not sustain the burden of proof that he did not know, and in the exercise of reasonable care could not have known, of the untruth or omission, is liable to the person buying the security from him, who may sue either at law or in equity to recover the consideration paid for the security, together with interest at six per cent per year from the date of payment, costs, and reasonable attorneys’ fees, less the amount of any income received on the security, upon the tender of the security, or for damages if he no longer owns the security. Damages are the amount that would be recoverable upon a tender less the value of the security when the buyer disposed of it and interest at six per cent per year from the date of disposition.
(b) Every person who directly or indirectly controls a seller liable under subsection (a), every partner, officer, or director of such a seller, every person occupying a similar status or performing similar functions, every employee of such a seller who materially aids in the sale, and every broker-dealer or agent who materially aids in the sale are also liable jointly and severally with and to the same extent as the seller, unless the non-seller who is so liable sustains the burden of proof that he did not know, and in exercise of reasonable care could not have known, of the existence of the facts by reason of which the liability is alleged to exist. There is contribution as in cases of contract among the several persons so liable.
(c) Any tender specified in this section may be made at any time before entry of judgment.
(d) Every cause of action under this statute survives the death of any person who might have been a plaintiff or defendant.
(e) No person may sue under this section more than four years after the discovery by the person bringing the action of a violation of this chapter or any rule promulgated or order issued thereunder. No person may sue under this section (1) if the buyer received a written offer, before suit and at a time when he owned the security, to refund the consideration paid together with interest at six percent per year from the date of payment, less the amount of any income received on the security, and he failed to accept the offer within thirty days of its receipt, or (2) if the buyer received such an offer before suit and at a time when he did not own the security, unless he rejected the offer in writing within thirty days of its receipt.
(f) No person who has made or engaged in the performance of any contract in violation of any provision of this chapter or any rule or order hereunder, or who has acquired any purported right under any such contract with knowledge of the facts by reason of which its making or performance was in violation, may base any suit on the contract.
(g) Any condition, stipulation, or provision binding any person acquiring any security to waive compliance with any provision of this chapter or any rule or order hereunder is void.
(h) The rights and remedies provided by this chapter are in addition to any other rights or remedies that may exist at law or in equity, but this chapter does not create any cause of action not specified in this section.
Chapter 110A: Section 411. Judicial Review of Orders Section 411. (a) Any person aggrieved by a final decision of the secretary in an adjudicatory proceeding may obtain judicial review pursuant to section fourteen of chapter thirty A.
(b) The commencement of proceedings under subsection (a) does not, unless specifically ordered by the court, operate as a stay of the secretary’s order.
Chapter 110A: Section 412. Rules, Forms, Orders, and Hearings Section 412. (a) The secretary may from time to time make, amend, and rescind such rules, forms, and orders as are necessary to carry out the provisions of this chapter, including rules and forms governing registration statements, applications, and reports, and defining any terms, whether or not used in this chapter, insofar as the definitions are not inconsistent with the provisions of this chapter. For the purpose of rules and forms, the secretary may classify securities, persons, and matters within its jurisdiction, and prescribe different requirements for different classes.
(b) No rule, form, or order may be made, amended, or rescinded unless the secretary finds that the action is necessary or appropriate in the public interest or for the protection of investors and consistent with the purposes fairly intended by the policy and provisions of this chapter. In prescribing rules and forms the secretary may cooperate with the securities administrators of the other states and the Securities and Exchange Commission with a view to effectuating the policy of this statute to achieve maximum uniformity in the form and content of registration statements, applications, and reports wherever practicable.
(c) The secretary may by rule or order prescribe (1) the form and content of financial statements required under this chapter, (2) the circumstances under which consolidated financial statements shall be filed, and (3) whether any required financial statements shall be certified by independent or certified public accountants. All financial statements shall be prepared in accordance with generally accepted accounting practices.
(d) All rules and forms of the secretary shall be published pursuant to sections six and six A of chapter thirty A.
(e) No provision of this chapter imposing any liability applies to any act done or omitted in good faith in conformity with any rule, form, or order of the secretary, notwithstanding that the rule, form, or order may later be amended or rescinded or be determined by judicial or other authority to be invalid for any reason.
(f) Every hearing in an administrative proceeding shall be public unless the secretary in his discretion grants a request joined in by all the respondents that the hearing be conducted privately.
(g) Assessments collected by the secretary pursuant to administrative actions may be used to assist investors. The assistance may include, but is not limited to, restitution for victims of financial fraud or other violations of this chapter.
Chapter 110A: Section 413. Administrative Files and Opinions Section 413. (a) A document is filed when it is received by the secretary.
(b) The secretary shall keep a register of all notice filings made under subsection (b) of section 202 and section 306 and all applications for registration and registration statements which are or have ever been effective under this chapter and all denial, suspension, or revocation orders which have been entered under this chapter. The register shall be open for public inspection.
(c) The information contained in or filed with any registration statement, application, or report may be made available to the public under such rules as the secretary prescribes.
(d) Upon request and at such reasonable charges as he prescribes, the secretary shall furnish to any person photostatic or other copies, certified under the seal of the secretary if requested, of any entry in the register or any document which is a matter of public record. In any proceeding or prosecution under this chapter, any copy so certified is prima facie evidence of the contents of the entry or document certified.
(e) The secretary in his discretion may honor requests from interested persons for interpretative opinions.
Chapter 110A: Section 414. Scope of the Act and Service of Process Section 414. (a) Sections 101, 201(a), 301, 405, and 410 apply to persons who sell or offer to sell when (1) an offer to sell is made in the commonwealth, or (2) an offer to buy is made and accepted in the commonwealth.
(b) Sections 101, 201(a), and 405 apply to persons who buy or offer to buy when (1) an offer to buy is made in the commonwealth, or (2) an offer to sell is made and accepted in the commonwealth.
(c) For the purpose of this section, an offer to sell or to buy is made in the commonwealth, whether or not either party is then present in the commonwealth, when the offer (1) originates from the commonwealth or (2) is directed by the offeror to the commonwealth and received at the place to which it is directed, or at any post office in the commonwealth in the case of a mailed offer.
(d) For the purpose of this section, an offer to buy or to sell is accepted in the commonwealth when acceptance (1) is communicated to the offeror in the commonwealth and (2) has not previously been communicated to the offeror, orally or in writing, outside the commonwealth; and acceptance is communicated to the offeror in the commonwealth, whether or not either party is then present in the commonwealth, when the offeree directs it to the offeror in the commonwealth reasonably believing the offeror to be in the commonwealth and it is received at the place to which it is directed, or at any post office in the commonwealth in the case of a mailed acceptance.
(e) An offer to sell or to buy is not made in the commonwealth when (1) the publisher circulates or there is circulated on his behalf in the commonwealth any bona fide newspaper or other publication of general, regular, and paid circulation which is not published in the commonwealth, or which is published in the commonwealth but has had more than two-thirds of its circulation outside the commonwealth during the past twelve months, or (2) a radio or television program originating outside the commonwealth is received in the commonwealth.
(f) Section 102 applies when any act instrumental in effecting prohibited conduct is done in the commonwealth, whether or not either party is then present in the commonwealth.
(g) Every applicant for registration under this chapter and every issuer which proposes to offer a security in the commonwealth through any person acting on an agency basis in the common-law sense shall file with the secretary, in such form as he by rule prescribes, an irrevocable consent appointing the secretary or his successor in office to be his attorney to receive service of any lawful process in any non-criminal suit, action, or proceeding against him or his successor, executor, or administrator which arises under this chapter or any rule or order hereunder after the consent has been filed, with the same force and validity as if served personally on the person filing the consent. A person who has filed such a consent in connection with a previous registration need not file another. Service may be made by leaving a copy of the process in the office of the secretary but it is not effective unless (1) the plaintiff, who may be the secretary in a suit, action, or proceeding instituted by it, forthwith sends notice of the service and a copy of the process by registered mail to the defendant or respondent at his last address on file with the secretary, and (2) the plaintiff’s affidavit of compliance with this subsection is filed in the case on or before the return day of the process, if any, or within such further time as the court allows.
(h) When any person, including any nonresident of the commonwealth, engages in conduct prohibited or made actionable by this chapter or any rule or order hereunder, and he has not filed a consent to service of process under subsection (g) and personal jurisdiction over him cannot otherwise be obtained in the commonwealth, that conduct shall be considered equivalent to his appointment of the secretary or his successor in office to be his attorney to receive service of any lawful process in any non-criminal suit, action, or proceeding against him or his successor, executor, or administrator which grows out of that conduct and which is brought under this chapter or any rule or order hereunder, with the same force and validity as if served on him personally. Service may be made by leaving a copy of the process in the office of the secretary, and it is not effective unless (1) the plaintiff, who may be the secretary in a suit, action, or proceeding instituted by it, forthwith sends notice of the service and a copy of the process by registered mail to the defendant or respondent at his last known address or takes other steps which are reasonably calculated to give actual notice, and (2) the plaintiff’s affidavit of compliance with this subsection is filed in the case on or before the return day of the process, if any, or within such further time as the court allows.
(i) When process is served under this section, the court, or the secretary in a proceeding before it, shall order such continuance as may be necessary to afford the defendant or respondent reasonable opportunity to defend.
Chapter 110A: Section 415. Statutory Policy Section 415. This chapter shall be so construed as to effectuate its general purpose to make uniform the law of those states which enact it and to coordinate the interpretation and administration of this chapter with the related federal regulation.
Chapter 110A: Section 416. Short Title Section 416. This chapter may be cited as the Uniform Securities Act.
Chapter 110A: Section 417. Severability of Provisions Section 417. If any provision of this chapter or the application thereof to any person or circumstance is held invalid, the invalidity shall not affect other provisions or applications of the act which can be given effect without the invalid provision or application, and to this end the provisions of this act are severable.
Section 1. As used in this chapter, the following words shall, unless the context otherwise requires, have the following meanings:“Applicant”, any person filing an application for registration of a mark under this chapter, his legal representatives, successors or assigns;“Mark”, any trademark or service mark entitled to registration under this chapter whether registered or not;“Person”, any individual, firm, partnership, corporation, association, union or other organization;“Registrant”, any person to whom the registration of a mark under this chapter is issued, his legal representative, successors or assigns;“Service mark”, a mark used in the sale or advertising of services to identify the services of one person and distinguish them from the services of others;“Trade name”, a word, name, symbol, device or any combination thereof used by a person to identify his business, vocation or occupation and distinguish it from the business, vocation or occupation of others;“Trademark”, any word, name, symbol or device, or any combination thereof, adopted and used by a person to identify goods made or sold by him, and to distinguish them from goods made or sold by others.
For the purposes of this chapter, a trademark shall be deemed to be “used” in the commonwealth (a) on goods when it is placed in any manner on the goods or their containers or the displays associated therewith or on the tags or labels affixed thereto and such goods are sold or otherwise distributed in the commonwealth, and (b) on services when it is used or displayed in the sale or advertising of services and the services are rendered in the commonwealth.
Section 10. Any person who shall for himself, or on behalf of any other person, procure the filing or registration of any mark in the office of the state secretary, by knowingly making any false or fraudulent representation or declaration, verbally or in writing, or by any other fraudulent means, shall be liable to pay all damages sustained in consequence of such filing or registration, to be recovered by or on behalf of the party injured thereby in any court of competent jurisdiction.
Section 11. Subject to the provisions of section fourteen, any person who shall:(a) use, without consent of the registrant, any reproduction, counterfeit, copy, or colorable imitation of a mark registered under this chapter in connection with the sale, offering for sale, or advertising of any goods or services on or in connection with which such use is likely to cause confusion or mistake or to deceive as to the source of origin of such goods or services; or(b) reproduce, counterfeit, copy or colorably imitate any such mark and apply such reproduction, counterfeit, copy or colorable imitation to labels, signs, prints, packages, wrappers, receptacles, or advertisements intended to be used upon or in conjunction with the sale or other distribution in the commonwealth of such goods or services, shall be liable to a civil action by the owner of such registered mark for any or all of the remedies provided in section thirteen, except that under this section the registrant shall not be entitled to recover profits or damages unless the acts have been committed with knowledge that such mark is intended to be used to cause confusion or mistake or to deceive.
Section 12. Likelihood of injury to business reputation or of dilution of the distinctive quality of a mark registered under this chapter, or a mark valid at common law, or a trade name valid at common law, shall be a ground for injunctive relief notwithstanding the absence of competition between the parties or the absence of confusion as to the source of goods or services.
Section 13. Any owner of a mark registered under this chapter may proceed by suit to enjoin the manufacture, use, display or sale of any counterfeits or imitations thereof and the superior court may grant injunctions to restrain such manufacture, use, display or sale as may be by the said court deemed just and reasonable, and may require the defendants to pay to such owner all profits derived from and all damages suffered by reason of such wrongful manufacture, use, display or sale; and such court may also order that any such counterfeits or imitations in the possession or under the control of any defendant in such case, be delivered to an officer of the court, or to the complainant, to be destroyed.
Section 14. Nothing herein shall adversely affect the rights or the enforcement of the rights in marks acquired in good faith at any time in common law.
Section 15. The state secretary shall make rules and regulations pursuant to chapter thirty A for the conduct of proceedings in his office under this chapter and shall make such regulation available to the public as provided in said chapter thirty A.
Section 16. If any provisions of any sections of this chapter shall be held invalid, the remainder of said sections and the application of such provisions to persons or circumstances other than those as to which it is held invalid, shall not be affected thereby.
Section 2. Subject to the limitations set forth in this chapter, any person who adopts and uses a mark may file in the office of the state secretary, on a form to be furnished by him, an application for registration of that mark setting forth, but not limited to, the following information:(a) the name and business address of the person applying for such registration; and, if a corporation, the state of incorporation,(b) the goods or services in connection with which the mark is used and the mode or manner in which the mark is used in connection with such goods or services and the class in which such goods or services fall,(c) the date when the mark was first used anywhere and the date when it was first used in the commonwealth by the applicant or his predecessor in business, and(d) a statement that the applicant is the owner of the mark and that no other person has the right to use such mark in the commonwealth either in the identical form thereof or in such near resemblance thereto as might be calculated to deceive or to be mistaken therefor.
The application shall be signed and verified by the applicant or by a member of the firm or an officer of the corporation or association applying.
The application shall be accompanied by a specimen or facsimile of such mark in triplicate.
The application for registration shall be accompanied by a filing fee of twenty-five dollars, payable to the state secretary.
Section 3. No person may register a mark if it:(a) consists of or comprises immoral, deceptive or scandalous matter; or(b) consists of or comprises matter which may disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute; or(c) consists of or comprises the flag or coat of arms or other insignia of the United States, or of any state or municipality, or of any foreign nation, or any simulation thereof; or(d) consists of or comprises the name, signature or portrait of any living individual, except with his written consent; or(e) when applied to the goods or services of the applicant, is merely descriptive or deceptively misdescriptive of them, or when applied to the goods or services of the applicant is primarily geographically descriptive or deceptively misdescriptive of them, or is primarily merely a surname provided, however, that nothing in this subsection shall prevent the registration of a mark used in the commonwealth by the applicant which has become distinctive of the applicant’s goods or services. The state secretary may accept as evidence that the mark has become distinctive, as applied to the applicant’s goods or services, proof of continuous use thereof as a mark by the applicant in the commonwealth or elsewhere for the five years next preceding the date of the filing of the application for registration; or(f) so resembles a mark registered in the commonwealth or a mark or trade name previously used in the commonwealth by another and not abandoned, as to be likely, when applied to the goods or services of the applicant, to cause confusion or mistake or to deceive.
Section 4. Upon compliance by the applicant with the requirements of this chapter, the state secretary shall cause a certificate of registration to be issued and delivered to the applicant.
The certificate of registration shall be issued under the signature of the state secretary and the seal of the commonwealth, and it shall show the name and business address and, if a corporation, the state of incorporation, of the person claiming ownership of the mark, the date claimed for the first use of the mark anywhere and the date claimed for the first use of the mark in the commonwealth, the class of goods or services and a description of the goods or services on which the mark is used, a reproduction of the mark, the registration date and the term of the registration.
Any certificate of registration issued by the state secretary under the provisions hereof or a copy thereof duly certified by the secretary shall be admissible in evidence as competent and sufficient proof of the registration of such mark in any action or judicial proceedings in any court of the commonwealth.
Registration of or renewal of a mark provided by this chapter shall be constructive notice of the registrant’s claim of ownership thereof and shall, when introduced in any action, be prima-facie evidence of the registrant’s exclusive right to use the registered mark in this commonwealth on goods or services specified in the registration subject to any conditions or limitations stated therein, but shall not preclude an opposing party from proving any legal or equitable defense or defect which might have been asserted if such mark had not been registered.
Section 5. Registration of a mark hereunder shall be effective for a term of ten years from the date of registration and, upon application filed within six months prior to the expiration of such term, on a form to be furnished by the state secretary, the registration may be renewed for a like term. A renewal fee of twenty-five dollars, payable to the state secretary, shall accompany the application for renewal of the registration.
A mark registration may be renewed for successive periods of ten years in like manner.
The state secretary shall notify registrants of marks hereunder of the necessity of renewal within the year next preceding the expiration of the ten years from the date of registration, by writing to the last known address of the registrants.
All applications for renewals under this chapter, whether of registrations made under this chapter or of registrations effected under any prior law, shall include a statement that the mark is still in use in the commonwealth.
Section 6. Any mark and its registration hereunder shall be assignable with the good will of the business in which the mark is used, or with that part of the good will of the business connected with the use of and symbolized by the mark. Assignment shall be by instruments in writing duly executed and may be recorded with the state secretary upon the payment of a fee of twenty dollars payable to the secretary who, upon recording of the assignment, shall issue in the name of the assignee a new certificate for the remainder of the term of the registration or of the last renewal thereof. An assignment of any registration shall be void as against any subsequent purchaser for valuable consideration without notice, unless it is recorded with the state secretary within three months after the date thereof or prior to such subsequent purchase.
Section 7. The state secretary shall keep for public examination a record of all marks registered or renewed under this chapter.
Section 8. The state secretary shall cancel:(1) any registration concerning which the state secretary shall receive a voluntary request for cancellation thereof from the registrant or the assignee of record;(2) any registration granted and not renewed in accordance with the provision hereof;(3) any registration which the superior court shall find(a) that the registered mark has been abandoned,(b) that the registrant is not the owner of the mark,(c) that the registration was granted improperly,(d) that the registration was obtained fraudulently,(e) that the registered mark is so similar, as to be likely to cause confusion or mistake or to deceive, to a mark registered by another person in the United States Patent Office, prior to the date of the filing of the application for registration by the registrant hereunder, and not abandoned; provided, however, that should the registrant prove that he is the owner of a concurrent registration of his mark in the United States Patent Office covering an area including the commonwealth, the registration hereunder shall not be cancelled.
(4) any registration which has been ordered cancelled by the superior court.
Section 9. The state secretary shall promulgate rules and regulations for the determination of classes of goods and services for the convenience of the administration of this chapter.
Section 1. As used in this chapter the following words shall, unless the context otherwise requires, have the following meanings:—“Affiliate of an offeror”, any person controlling, controlled by, or under common control with an offeror.
“Associate of an offeror”, (1) Any corporation or other organization of which the offeror is an officer or partner or is, directly or indirectly, the beneficial owner of ten per cent or more of any class of equity securities; (2) Any person who is, directly or indirectly, the beneficial owner of ten per cent or more of any class of equity securities of the offeror; (3) Any trust or other estate in which the offeror has a substantial beneficial interest or as to which the offeror serves as a trustee or in a similar fiduciary capacity; and (4) Any relative or spouse of the offeror or any relative of such spouse who has the same home as the offeror.
“Equity security”, any shares or similar securities, or any securities convertible into such securities, or carrying any warrant or right to subscribe to or purchase such securities, or any such warrant or right, or any other security which, for the protection of security holders, is treated as an equity security pursuant to chapter one hundred and ten A.
“Offeree”, the beneficial or record owner of securities which an offeror acquires or offers to acquire in connection with a take-over bid.
“Offeror”, a person who makes, or in any way participates or aids in making, a take-over bid, and includes persons acting jointly or in concert, or who intend to exercise jointly or in concert any voting rights attached to the securities for which such take-over bid is made. “Offeror” does not include any bank or broker-dealer lending funds to an offeror in the ordinary course of its business, or any bank, broker-dealer, attorney, accountant, consultant, employee, or other person furnishing information or advice to, or performing ministerial duties for, an offeror, and not otherwise participating in the take-over bid.
“Person”, an individual, a corporation, a partnership, an association, a joint-stock company, a trust where the interests of the beneficiaries are evidenced by a security, or an unincorporated organization.
“Principal place of business” of a corporation, the corporate headquarters where the general executive offices are located and from which the corporation’s activities are controlled and directed by executive officers of the corporation.
“Secretary”, the state secretary.
“Take-over bid”, the acquisition of or offer to acquire, whether by a formal public announcement, by a tender offer or request or invitation for tenders, by the accumulation of stock in the market or the solicitation of particular shareholders, or otherwise any equity security of a target company if, after acquisition thereof, the offeror and the associates and affiliates of the offeror would be directly or indirectly the beneficial owners of more than ten per cent of any class of the issued and outstanding equity securities of such target company. In determining whether a person is directly or indirectly a beneficial owner of equity securities of any class, such person shall be deemed to be the beneficial owner of equity securities of such class which such person has the right to acquire through the exercise of presently exercisable options, warrants, or rights or through the conversion of presently convertible securities or otherwise. The equity securities subject to such options, warrants, rights, or conversion privileges held by a person shall be deemed to be outstanding for the purpose of computing the percentage of outstanding equity securities of the class owned by such person but shall not be deemed to be outstanding for the purpose of computing the percentage of the class owned by any other person. A take-over bid does not include: (1) A bid made by a dealer for his own account in the ordinary course of his business of buying and selling such security in which the dealer does not solicit or arrange for the solicitation of offers to sell shares; (2) An offer to acquire such equity security for consideration consisting primarily of securities covered by a current prospectus forming a part of a registration statement which has become effective under 15 USC § 77a et seq.
; (3) An offer made by an offeror to acquire its own securities or securities of a subsidiary, at least two-thirds of the voting securities of which subsidiary are owned beneficially by the offeror; (4) Any take-over bid to which the target company consents, by action of its board of directors, if such board of directors has recommended acceptance thereof to shareholders and the terms thereof, including any inducements to officers or directors which are not made available to all shareholders, have been furnished to shareholders; (5) An offer which, if accepted by all offerees, shall not result in the offeror having acquired more that two per cent of the same class of equity securities of the issuer within the preceding twelve-month period; or (6) An offer to acquire equity securities of any corporation if the total number of the beneficial owners of all of the classes of the equity securities of such corporation shall be less than twenty-five persons.
“Target company”, a corporation, organized under the laws of or having its principal place of business in the commonwealth, whose securities are or are to be the subject of a take-over bid.
Section 10. (a) The secretary may, pursuant to section four hundred and twelve of chapter one hundred and ten A prescribe reasonable rules and regulations or issue orders with respect to particular situations:(1) Defining any terms used in this chapter including fraudulent, evasive, deceptive, manipulative or grossly unfair practices in connection with take-over bids.
(2) Exempting from this chapter take-over bids not made for the purpose of, and not having the effect of, changing or influencing the control of a target company.
(3) Covering such other matters as are necessary to give effect to this chapter.
(4) Waiving jurisdiction over a take-over bid if he determines that: (i) the take-over bid is subject to the jurisdiction of another state having a statute or regulation similar in purpose and effect to this chapter; (ii) information similar to that specified in section four is required to be filed with the administrator of such other state; (iii) such other state has a greater interest in regulating the take-over bid than the commonwealth, and (iv) the purpose of this chapter will be accomplished and the public interest will be better served by such waiver.
(b) The secretary may delegate to the director of securities the authority to perform any duty and exercise any power assigned to the secretary under the provisions of this chapter.
Section 11. If the offeror or a target company is an insurance company subject to regulation under chapter one hundred and seventy-five to chapter one hundred and seventy-five C, inclusive, the commissioner of insurance shall for all purposes of this section be substituted for the secretary. This section shall not be construed to limit or modify in any way any responsibility, authority, power, or jurisdiction of the secretary or the commissioner of insurance pursuant to any other provisions of law.
Section 12. This chapter does not apply when:—(a) The offeror or the target company is a public utility or a public utility holding company as defined in section two of the “Public Utility Holding Company Act of 1935”, 15 U.
S.
C. 79, as amended, and the take-over bid is subject to approval by the appropriate federal agency as provided in such act;(b) The offeror or the target company is a bank or a bank holding company subject to the “Bank Holding Company Act of 1956”, 12 U.
S.
C. 1841, as amended, and the take-over bid is subject to approval by the appropriate federal agency as provided in such act;(c) The offeror or the target company is a savings and loan holding company as defined in section two of the “Savings and Loan Holding Company Amendments of 1967”, 12 U.
S.
C. 1730A, as amended, and the take-over bid is subject to approval by the appropriate federal agency as provided in such act;(d) The offeror and the target company are banks and the offer is part of a merger transaction subject to approval by appropriate federal supervisory authorities.
Section 13. The provisions of this chapter are severable and if any such provision or the application of such provision to any person or circumstances shall be held to be invalid or unconstitutional, such invalidity or unconstitutionality shall not affect the validity or constitutionality of any of the remaining provisions of this chapter or the application of such provision to said person or circumstances.
Section 2. No offeror shall make a take-over bid unless he announces publicly the terms of the proposed take-over bid, files with the secretary and the target company, on the date of the commencement of the take-over bid, copies of all information required by section four, and pays the secretary a filing fee of one thousand dollars to defray the costs of any investigation the secretary may make in connection therewith.
Within five days following such filing, or after a request made by the target company or an offeree within said five days, the secretary may order a hearing within ten days following such filing if he determines it necessary or appropriate for the protection of offerees in the commonwealth. If no such hearing is ordered within said ten days or a hearing is so ordered within such time and after hearing the secretary adjudicates that the take-over bid is not in violation of this chapter and that effective provision is made for fair and full disclosure to offerees of all information material to a decision to accept or reject the offer, the take-over bid shall be deemed to be in compliance with this chapter. If the secretary finds that the take-over bid would comply with provisions of this chapter if amended in certain respects, the take-over bid shall be deemed to be in compliance with this chapter only if so amended.
Section 3. No offeror shall make a take-over bid if he and his associates and affiliates are directly or indirectly the beneficial owners of five per cent or more of the issued and outstanding equity securities of any class of the target company, any of which were purchased within one year before the proposed take-over bid, and the offeror, before making any such purchase, or before the thirtieth day following the effective date of this section, whichever is later, failed to publicly announce his intention to gain control of the target company, or otherwise failed to make fair, full, and effective disclosure of such intention to the persons from whom he acquired such securities.
Section 4. The information to be filed by the offeror with the secretary and the target company pursuant to section two shall include:—Copies of all prospectuses, brochures, advertisements, circulars, letters, or other matter by means of which the offeror proposes to disclose to offerees all information material to a decision to accept or reject the offer;The identity and background of all persons on whose behalf the acquisition of any equity security of the target company has been or is to be effected;The source and amount of funds or other consideration used or to be used in acquiring any equity security, including a statement describing any securities, other than the existing capital stock or long term debt of the offeror, which are being offered in exchange for the equity securities of the target company, and if any part of the acquisition price is or will be represented by borrowed funds or other consideration, a description of the material terms of any financing arrangements and the names of the parties from whom the funds were borrowed;A statement of any plans or proposals which the offeror, upon gaining control, may have to liquidate the target company, sell its assets, effect a merger or consolidation of it, or make any other major change in its business, corporate structure, management personnel, or policies of employment;The number of shares of any equity security of the target company of which each offeror or an affiliate or an associate of each offeror is beneficial or record owner or has a right to acquire, directly or indirectly, together with the name and address of each person defined in this section as an offeror;Particulars as to any contracts, arrangements, or understandings to which an offeror is party with respect to any equity security of the target company, including without limitation transfers of any equity security, joint ventures, loan or option arrangements, puts and calls, guarantees of loan, guarantees against loss, guarantees of profits, division of losses or profits, or the giving or withholding of proxies, naming the persons with whom such contracts, arrangements, or understandings have been entered into;Complete information on the organization and operations of offeror, including without limitation the year of organization, form of organization, jurisdiction in which it is organized, a description of each class of the offeror’s capital stock and of its long term debt, audited balance sheets and income statements for each of the three most recent fiscal years and if the most recent balance sheet and income statement are for a period ended more than ninety days prior to the date of filing, an interim balance sheet and income statement covering the period from the date of the last audited balance sheet and income statement filed hereunder to a date within ninety days of the date of filing, a brief description of the location and general character of the principal physical properties of the offeror and its subsidiaries, a description of pending legal proceedings other than routine litigation to which the offeror or any of its subsidiaries is a party or of which any of their property is the subject, a brief description of the business done and projected by the offeror and its subsidiaries and the general development of such business over the past five years, the names of all directors and executive officers together with biographical summaries of each for the preceding five years to date, and the approximate amount of any material interest, direct or indirect, of any of the directors or officers in any material transaction during the past three years, or in any proposed material transactions to which the offeror or any of its subsidiaries was or is to be a party;A description of any court or governmental proceeding in which the offer has been disapproved or enjoined and of any pending court or governmental proceeding in which it is alleged that the offer does not comply with the provisions of the applicable laws or regulations;A statement of which other tender offers subject to Section 13 Clause (d) or proxy contests subject to section 14 of The Securities Exchange Act of 1934, 15 U.
S.
C. 78a, et seq.
, as amended, the offeror has engaged in within five years prior to the offer;A statement of whether any officer or director of the offeror or the offeror has(1) been convicted within the prior ten years of a felony, or(2) been subject of a judgment or decree entered by a court or governmental agency with respect to laws relating to(a) anti-trust,(b) fair employment practices,(c) purchase or sale of securities, or(d) environmental protection; andSuch other and further documents, exhibits, data, and information as may be required by regulations of the secretary or as may be necessary to make fair, full, and effective disclosure to offerees of all information material to a decision to accept or reject the offer.
In connection with any take-over bid which is subject to federal law, the secretary may permit any offeror to file any document, schedule or statement required to be filed with the appropriate federal agency in lieu of the information required by this section, with such additions or modifications as the secretary may prescribe.
Section 5. Copies of all advertisements, circulars, letters or other solicitation materials published by the offeror or the target company on or after the date that the take-over bid may be made in accordance with section two shall be filed with the secretary and delivered by the target company, or the offeror, as the case may be, to the other of them on the date that the same are first published or used or sent to offerees.
Section 6. Any hearing pursuant to this section shall be commenced within twenty days of the date a filing is made pursuant to section two. Adjudications made pursuant to this section shall be made within forty-five days after such filing and pursuant to section four hundred and twelve of chapter one hundred and ten A. Upon filing an application with the secretary for a hearing under this section, the target company shall pay to the secretary a fee of two hundred and fifty dollars, and shall deposit with the secretary such sum, not exceeding seven hundred and fifty dollars, as the secretary may require to defray the costs of such hearing and any investigation which the secretary may make in connection therewith. If, after hearing, the secretary finds that the take-over bid is in violation of this chapter or that effective provision is not made for fair and full disclosure to offerees of all information material to a decision to accept or reject the offer, he shall so adjudicate. If he finds that the take-over bid would comply with this chapter if amended in certain respects, he shall so adjudicate. If he finds that the take-over bid is not in violation of this chapter and that effective provision is made for fair and full disclosure to offerees of all information material to a decision to accept or reject the offer, he shall so adjudicate.
Section 7. It is unlawful for any offeror or target company or any affiliate or associate of an offeror or target company or any broker-dealer acting in behalf of an offeror or target company to make any untrue statement of a material fact or to conceal any material fact in order to make the statements misleading, or to engage in any fraudulent, evasive, deceptive, manipulative or grossly unfair practices in connection with a take-over bid.
No take-over bid shall be made unless it is made under the provisions of this chapter, and no offeror shall make a take-over bid which is not made to all holders residing in the commonwealth of the equity security that is the subject of such take-over bid, or which is not made to such holders on the same terms as such take-over bid is made to holders of such equity security not residing within the commonwealth. If a take-over bid is made for less than all the outstanding equity securities of any class and if the number of securities deposited pursuant thereto is greater than the number the offeror has agreed to accept, the offeror shall take up and pay for the securities pro-rata, disregarding fractions, according to the number of securities deposited by each offeree. If the terms of a take-over bid are changed before its expiration by increasing the consideration offered to offerees, the offeror shall pay the increased consideration for all equity securities taken up, whether the same are deposited or taken up before or after the change in the terms of the take-over bid.
No offeror shall make a take-over bid which does not remain open for at least fifteen days after it is deemed to be in compliance with this chapter with the right to extend such period; purchase any shares pursuant to a take-over bid prior to the expiration of such fifteen day period; offer to pay an offeree a fee, commission or any other consideration not offered to all offerees; or publish or use in connection with the offer any false statement of a material fact or conceal a material fact in order to make the statement misleading.
Securities deposited pursuant to a take-over bid may be withdrawn by an offeree or his attorney-in-fact by demand in writing to the offeror or the depository at any time up to five days prior to the announced termination date of the offer.
Section 8. If the offeror or the target company is a banking corporation subject to regulation by the commissioner of banks, or a public utility corporation subject to regulation by the department of telecommunications and energy, the secretary shall forthwith, upon receipt of the filing required under section two, furnish a copy of such filing to the regulatory body having jurisdiction over the offeror or target company.
Section 9. (a) Any offeror who purchases a security in connection with a take-over offer in violation of this chapter shall be liable to the person selling the security to him who may sue either at law or in equity. In an action for rescission the seller shall be entitled to recover the security, plus any income received by the purchaser thereon, upon tender of the consideration received. Tender requires only notice of willingness to pay the amount specified in exchange for the security. Any notice may be given by service as in civil actions or by certified mail to the last known address of the person liable. Damages are the excess of either the value of the security on the date of purchase or its present value, whichever is greater, over the present value of the consideration received for the security.
(b) Every associate and affiliate of a person liable under paragraph (a), every partner, principal executive officer or director of such person, every person occupying a similar status or performing similar functions, every employee of such person who materially aids in the act or transaction constituting the violation, and every broker-dealer or agent who materially aids in the act or transaction constituting the violation, is also liable jointly or severally with and to the same extent as such person, unless the person who would otherwise be so liable proves that he did not know, and in the exercise of reasonable care could not have known, of the existence of the facts by reason of which the liability is alleged to exist. There is contribution as in cases of contract among the several persons so liable.
(c) No action may be maintained under paragraph (a) or (b) unless commenced before the expiration of three years after the act or transaction constituting the violation or the expiration of one year after the discovery of the facts constituting the violation, whichever first expires.
(d) The rights and remedies under this chapter are in addition to any other rights or remedies that may exist at law or in equity.
(e) Whenever it appears to the secretary that any person has engaged or is about to engage in any act or practice constituting a violation of this chapter, or any rule or order hereunder, (1) he may issue and cause to be served upon any person violating any of the provisions of this chapter, an order requiring the person guilty thereof to cease and desist therefrom; and (2) he may bring an action in the superior court division of the appropriate county to enjoin the acts or practices and to enforce compliance with this chapter, or any rule or order hereunder, or he may refer the matter to the attorney general or the district attorney of the appropriate county.
(f) Any person, who violates section two or any rule thereunder, or any order of which he has notice, or who willfully violates section seven or any rule or order thereunder, may be fined not more than five thousand dollars or imprisoned for not more than three years or both. Each of the acts specified shall constitute a separate offense and a prosecution or conviction for any one of such offenses shall not bar prosecution or conviction for any other offense. No indictment or information may be returned under sections two and seven more than six years after the alleged violation.
(g) The secretary may refer such evidence as is available concerning violations of this chapter or of any rule or order hereunder to the attorney general or the district attorney of the appropriate county who may, with or without any reference, institute the appropriate criminal proceedings under this chapter. If referred to a district attorney, he shall within ninety days file with the secretary a statement concerning any action taken or, if no action has been taken, the reasons therefor.
(h) Nothing in this chapter limits the power of the state to punish any person for any conduct which constitutes a crime under any other statute.
(i) Whenever any person has engaged or is about to engage in any act or practice constituting a violation of this chapter or any rule or order hereunder, the offeror, target company or any offeree may bring an action in the superior court division of the appropriate county to enjoin that person from continuing or doing any act in violation of this chapter.
(j) Upon an appropriate showing in any action brought under paragraph (e) or (i), the court may grant a permanent or temporary injunction or restraining order and may order rescission of any sales or purchases of securities determined to be unlawful under this chapter, or any rule or order hereunder.
Section 1. As used in this chapter, the following words, unless the context clearly requires otherwise, shall have the following meanings:—(a) “Associate”, any person who directly or indirectly controls or is controlled by, or is under common control with, a person who is acting or intends to act jointly or in concert with a person in connection with a control share acquisition, “control”, as used in this subsection meaning the possession, direct or indirect, of the power to direct or cause the direction of the management or policies of a person, whether through the ownership of voting securities, by contract or otherwise; any corporation or organization of which a person is an officer, director or partner or in which a person performs a similar function; any direct or indirect beneficial owner of ten percent or more of any class of equity securities of a person; any trust or estate in which a person has a beneficial interest not represented by transferable shares or as to which a person serves as trustee or in a similar fiduciary capacity; and any relative or spouse of a person, or any relative of such spouse, any one of whom has the same residence as such person.
(b) “Beneficial ownership”, the sole or shared power to dispose or direct the disposition of shares or the sole or shared power to vote or to direct the voting of shares, whether such power is direct or indirect or through any contract, arrangement, understanding, relationship or otherwise. A person shall not be deemed to be a beneficial owner of shares as to which such person may exercise voting power solely by virtue of a revocable proxy conferring the right to vote. A member of a national securities exchange shall not be deemed to be a beneficial owner of shares held directly or indirectly by it on behalf of another person solely because such member is the record holder of such securities and, pursuant to the rules of such exchange, may direct the vote of such shares, without instruction, on other than contested matters or matters that may affect substantially the rights or privileges of the holders of the shares to be voted but is otherwise precluded by the rules of such exchange from voting without instructions.
(c)(1) “Control share acquisition”, the acquisition by any person of beneficial ownership of shares of an issuing public corporation which, but for the provisions of this chapter, would have voting rights and which, when added to all other shares of such corporation beneficially owned by such person, would entitle such person, upon acquisition of such shares, to vote or direct the voting of shares of such corporation having voting power in the election of directors within any of the following ranges of such voting power:—(i) one-fifth or more but less than one-third of all voting power;(ii) one-third or more but less than a majority of all voting power; or(iii) a majority or more of all voting power.
If this chapter applies to an issuing public corporation at the time a person makes a control share acquisition, all shares of such issuing public corporation the beneficial ownership of which is acquired by such person within ninety days before or after the date on which such person makes an acquisition of beneficial ownership of shares which results in such control share acquisition, regardless of whether this chapter was in effect or applies to such corporation during such ninety day period, and all shares acquired by such person pursuant to a plan to make a control share acquisition, shall be deemed to have been acquired in the same control share acquisition for purposes of this chapter.
(2) Subject to the provisions of the last paragraph of paragraph (1) of subsection (c), a “control share acquisition” shall not include the acquisition of beneficial ownership of shares acquired:(i) before June twenty-sixth, nineteen hundred and eighty-seven; provided, however, that the aggregate of shares of beneficial ownership of which is acquired before such date is within the range of voting power established by paragraph (1).
(ii) pursuant to a contract to acquire shares existing before June twenty-sixth, nineteen hundred and eighty-seven;(iii) during any period after July fifteenth, nineteen hundred and eighty-seven that this chapter does not apply to the issuing public corporation pursuant to the provisions of section two;(iv) by will or pursuant to the laws of descent and distribution;(v) pursuant to the satisfaction of a pledge or other security interest created in good faith and not for the purpose of circumventing the provisions of this chapter;(vi) pursuant to a tender offer, merger or consolidation, but only if such tender offer, merger or consolidation is pursuant to an agreement of merger or consolidation to which the issuing public corporation is a party; or(vii) directly from the issuing public corporation or a wholly-owned subsidiary thereof.
(3) The acquisition of beneficial ownership of shares of an issuing public corporation does not constitute a control share acquisition if the acquisition is made by or from:(i) a person whose voting rights with respect to shares of such corporation were previously authorized by the stockholders of the corporation in compliance with this chapter, unless such acquisition, when added to all other shares of such corporation beneficially owned by the person making such acquisition, would entitle such acquiring person to vote or direct the voting of shares of such corporation having voting power in the election of directors in excess of the range of voting power within which all shares beneficially owned by such person whose voting rights were previously so authorized had voting power immediately following such authorization; or(ii) a person whose previous acquisition of beneficial ownership of shares of such corporation would have constituted a control share acquisition but for the provisions of paragraph (2) of subsection (c), unless such later acquisition, when added to all other shares of such corporation beneficially owned by the person making such acquisition, would entitle such acquiring person to vote or direct the voting of shares of such corporation having voting power in the election of directors in excess of the range of voting power within which the person who made such previous acquisition could exercise voting power immediately following such previous acquisition.
(d) “Interested shares”, the shares of an issuing public corporation which are beneficially owned by:(i) any person who has acquired or proposes to acquire beneficial ownership of shares of such issuing public corporation in a control share acquisition;(ii) any officer of the issuing public corporation; or(iii) any employee of the issuing public corporation who is also a director of such corporation.
(e) “Issuing public corporation”, a corporation to which paragraph (a) of section 17.
01 of chapter 156D apply, a gas or electric company or combined gas and electric company to which section 3 of chapter 164 apply or an association or trust which pursuant to said section 3 of said chapter 164 owns beneficially a majority of the common stock of such a company; provided, however, that such issuing public corporation has:(i) two hundred or more stockholders of record; and(ii) its principal executive office or substantial assets within the commonwealth; and(iii) either: more than ten percent of its stockholders of record residing within the commonwealth; or more than ten percent of its issued and outstanding shares owned of record by residents of the commonwealth.
The record date for determining the percentages and numbers of stockholders and shares specified in this subsection shall be the last stockholder record date before the control share acquisition as to which the determination is being made or, if earlier, before the date on which a control share acquisition statement relating thereto is filed under the provisions of section three. A stockholder record date is the date fixed by the board of directors or, if applicable, the date when transfer books are closed by the board of directors, in connection with determining stockholders entitled to notice of and vote at a meeting, or to consent or dissent, to receive any dividend or other distribution, or for the purpose of any other lawful action. If a stockholder record date has not been fixed by the board of directors within the preceding four months, the determination shall be made as of the end of the issuing public corporation’s most recent fiscal quarter.
The residence of stockholder is presumed to be the address appearing in the records of the corporation. Shares held of record by brokers or nominees shall be disregarded for purposes of calculating the percentages and numbers specified in this subsection. Any shares of an issuing public corporation allocated to the account of an employee or former employee, or beneficiary of an employee or former employee, of such corporation and held in a plan that is qualified under section 401(a) of the Internal Revenue Code of 1986, as amended, and is a defined contribution plan within the meaning of section 414(i) of said Code shall be deemed, for the purposes of clause (iii), to be held of record by the employee, former employee or beneficiary to whose account such shares are allocated.
In the case of an issuing public corporation which is an association or trust, “references to articles of organization” mean the instrument or declaration of trust, references to “by-laws” include publicly announced resolutions of the directors; references to “directors”, the “clerk” and “assistant clerk” mean the individuals performing similar functions; and references to the “corporation” or “such corporation” mean the association or trust.
(f) “Person”, any individual, corporation, partnership, unincorporated association or other entity, and any associate of any such person.
Section 2. (a) If the articles of organization or by-laws of an issuing public corporation provide, at the time of any control share acquisition which occurs prior to January first, nineteen hundred and eighty-eight, that this chapter shall apply to control share acquisitions of such corporation, shares of such corporation acquired in any such control share acquisition shall have only such voting rights as are authorized pursuant to the provisions of section five.
(b) If the board of directors of an issuing public corporation has adopted a vote prior to any control share acquisition which occurs prior to January first, nineteen hundred and eighty-eight, that the provisions of this chapter shall apply to control share acquisitions of such corporation, shares of such corporation acquired in any such control share acquisition shall have only such voting rights as are authorized pursuant to the provisions of section five. Within thirty days after the adoption of any such vote, the corporation shall submit to the state secretary a certificate signed under the penalties of perjury by the president or a vice president and by the clerk or an assistant clerk setting forth a copy of such vote of the directors, the date of adoption of such vote, and a certification that such vote was duly adopted by the directors.
(c) Unless the articles of organization or by-laws of an issuing public corporation provide, at the time of any control share acquisition which occurs on or after January first, nineteen hundred and eighty-eight, that the provisions of this chapter shall not apply to control share acquisitions of such corporation, shares of such corporation acquired in such control share acquisition shall have only such voting rights as are authorized pursuant to section five.
(d) If the articles of organization or by-laws of an issuing public corporation are amended to provide that the provisions of this chapter shall not apply to control share acquisitions of such corporation, or to eliminate a provision that this chapter shall not apply to control share acquisitions of such corporation, any such amendment shall apply only to control share acquisitions which occur after the effective date of such amendment.
(e) No amendment to the articles of organization adopted by a corporation pursuant to this section shall give any stockholder appraisal rights under section 13.
02 of chapter 156D.
Section 3. Any person who has made a control share acquisition or has made a bona fide written offer to make a control share acquisition may deliver to the issuing public corporation, personally or by registered or certified mail at its principal office, a control share acquisition statement which shall contain the following:(i) the identity of such person and any associate of such person who intends to acquire or has acquired beneficial ownership of shares of the issuing public corporation;(ii) a statement that such control share acquisition statement is being made and delivered pursuant to the provisions of this chapter;(iii) the number and class or series of shares of the issuing public corporation beneficially owned by such person and each associate of such person prior to the control share acquisition;(iv) the number and class or series of shares acquired or proposed to be acquired by such person pursuant to the control share acquisition and the range of voting power to which the control share acquisition is or, if consummated, would be subject pursuant to the provisions of subsection (c) of section one;(v) a description of the terms and conditions of the proposed or completed control share acquisition, including but not limited to the prices paid by such person in the control share acquisition and the dates upon which the shares were acquired; and(vi) if the control share acquisition has not been completed, a representation by such person that such person has the financial capacity to consummate the proposed control share acquisition, together with a statement in reasonable detail of the material facts upon which such representation is based.
Section 4. (a) If the person delivering the control share acquisition statement so demands in writing contemporaneously with the delivery of such control share acquisition statement, the board of directors of the issuing public corporation, within ten days after the receipt of the demand, shall call a special meeting of stockholders for the purpose of considering whether voting rights shall be authorized for the shares acquired or to be acquired in the control share acquisition. The demand shall not be effective unless accompanied by an undertaking to pay the corporation’s reasonable expenses in connection with the special meeting but not including the expenses of the corporation incurred in opposing a vote to authorize voting rights for the shares acquired or proposed to be acquired in the control share acquisition. As promptly as reasonably practicable after the board has called the special meeting, the corporation shall give written notice of the special meeting to stockholders. Such notice shall be given not less than twenty days before the date of the special meeting. Unless the person delivering the control share acquisition statement and the corporation shall agree in writing to a later date, the special meeting shall be held not more than fifty days after the receipt by the corporation of the demand. If the person delivering the control share acquisition statement so requests in the demand, the special meeting shall be held no sooner than thirty days after receipt by the corporation of the demand.
(b) If no demand respecting a special meeting of the issuing public corporation’s stockholders is made in accordance with subsection (a), consideration of the voting rights to be authorized for the shares acquired or to be acquired in the control share acquisition shall be presented at the next annual or special meeting of the corporation’s stockholders notice of which has not been given prior to the receipt by the corporation of the control share acquisition statement.
(c) The notice to the issuing public corporation’s stockholders of any annual or special meeting at which the voting rights to be accorded shares acquired or proposed to be acquired in a control share acquisition are to be considered shall be directed to all stockholders of record of the issuing public corporation as of the record date set for such meeting. Such notice shall include or be accompanied by a copy of the control share acquisition statement received by the issuing public corporation pursuant to this chapter, notice of rights, if any, arising pursuant to section seven and such other information as the issuing public corporation deems appropriate.
Section 5. Shares acquired in a control share acquisition shall have the same voting rights as all other shares of the same class or series of the issuing public corporation only to the extent authorized by vote of the stockholders of the issuing public corporation at any annual meeting of stockholders or special meeting of stockholders. Such authorization shall require the affirmative vote of the holders of a majority of all of the shares entitled to vote generally in the election of directors, excluding interested shares. Interested shares shall be disregarded for determining a quorum and shall not be entitled to vote with respect to such authorization. If no such vote is adopted, such shares shall regain their voting rights upon transfer of beneficial ownership of such shares to another person unless such transfer constitutes a control share acquisition by the acquirer, in which event the voting rights of such shares shall be subject to the provisions of this chapter.
Section 6. (a) The articles of organization or by-laws of an issuing public corporation, by provision effective at the time of the occurrence of a control share acquisition, may authorize the redemption, at the option of such corporation but without requiring the agreement of the person who has made a control share acquisition, of all but not less than all shares acquired in such a control share acquisition, from such person for the fair value of such shares if:(i) no control acquisition statement has been delivered; or(ii) a control acquisition statement has been delivered and voting rights were not authorized for such shares by the stockholders in accordance with the provisions of section five.
(b) Notice of such redemption shall be given by the issuing public corporation not later than sixty days after the date on which the stockholders of the issuing public corporation voted not to authorize voting rights for the shares to be redeemed, or if no control share acquisition statement has been delivered prior to the date on which notice of redemption is given by the issuing public corporation not later than, sixty days after the first date on which the board of directors of the issuing public corporation has actual knowledge of such control share acquisition.
(c) For purposes of this section, fair value shall be determined as of the date on which stockholders of the issuing public corporation voted not to authorize voting rights for the shares to be redeemed, or, if no control acquisition statement is delivered, as of the date on which the issuing public corporation determines to make a redemption under this section. Such value shall be determined in accordance with procedures adopted by the issuing public corporation and without regard to the effect of the denial of voting rights under the provisions of section five.
Section 7. Unless otherwise expressly provided in an issuing public corporation’s articles of organization or by-laws in effect at the time of a control share acquisition of shares of such corporation, if voting rights are authorized for shares acquired in such control share acquisition in accordance with the provisions of section 5 and, in such control share acquisition, the person making such control share acquisition has acquired beneficial ownership of shares that, when added to all other shares of such corporation beneficially owned by such person, entitle such person to vote, or direct the voting of, shares of such corporation having a majority or more of all voting power in the election of directors, each stockholder of record of such corporation, other than the person making such control share acquisition, who has not voted in favor of authorizing voting rights for the shares acquired in such control share acquisition may demand payment for his stock and an appraisal in accordance with the part 13 of chapter 156D, and such stockholder and such corporation shall have the rights and duties and follow the procedures set forth in that part as nearly as practicable. For purposes of said part 13, the corporate action shall be deemed to have become effective on the later of the date such voting rights are authorized or the date on which such control share acquisition is made. For purposes of this section, fair value shall be determined as of the date on which the stockholders authorize voting rights for the shares acquired in such control share acquisition, but in no event it shall be less than the highest price per share paid by the person who made such control share acquisition in such control share acquisition. For purposes of said sections eighty-six to ninety-eight, inclusive, the corporate action shall be deemed to have become effective on the later of the date such voting rights are authorized or the date on which such control share acquisition is made. For purposes of this section, fair value shall be determined as of the date on which the stockholders authorize voting rights for the shares acquired in such control share acquisition, but in no event it shall be less than the highest price per share paid by the person who made such control share acquisition in such control share acquisition.
Section 8. To the extent that this chapter is inconsistent with chapter 156D, 164 or 182, the provisions of this chapter shall govern.
No provisions of this chapter shall be deemed to limit the power of an association or trust to amend its instrument or declaration of trust to the extent otherwise lawful.
Section 1. As used in this chapter, the following words, unless the context clearly requires otherwise, shall have the following meanings:—(a) “Associate”, any person who directly or indirectly controls, or is controlled by, or is under common control with, a person or who is acting or intends to act jointly or in concert with a person in connection with a control share acquisition, “control”, as used in this subsection, meaning the possession, direct or indirect, of the power to direct or cause the direction of the management or policies of a person, whether through the ownership of voting securities, by contract or otherwise; any corporation or organization of which a person is an officer, director or partner or in which a person performs a similar function; any direct or indirect beneficial owner of ten percent or more of any class of equity securities of a person; any trust or estate in which a person has a beneficial interest not represented by transferable shares or as to which a person serves as trustee or in a similar fiduciary capacity; and any relative or spouse of a person, or any relative of such spouse, any one of whom has the same residence as such person.
(b) “Beneficial ownership”, the sole or shared power to dispose or direct the disposition of shares or the sole or shared power to vote or to direct the voting of shares, whether such power is direct or indirect or through any contract, arrangement, understanding, relationship or otherwise. A person shall not be deemed to be a beneficial owner of shares as to which such person may exercise voting power solely by virtue of a revocable proxy conferring the right to vote. A member of a national securities exchange shall not be deemed to be a beneficial owner of shares held directly or indirectly by it on behalf of another person solely because such member is the record holder of such securities and, pursuant to the rules of such exchange, may direct the vote of such shares, without instruction, on other than contested matters or matters that may affect substantially the rights or privileges of the holders of the shares to be voted but is otherwise precluded by the rules of such exchange from voting without instruction.
(c)(1) “Control share acquisition”, the acquisition by any person of beneficial ownership of shares of an issuing public corporation which, but for the provisions of this chapter, would have voting rights and which, when added to all other shares of such corporation beneficially owned by such person, would entitle such person, upon acquisition of such shares, to vote or direct the voting of shares of such corporation having voting power in the election of directors within any of the following ranges of such voting power:—(i) one-fifth or more but less than one-third of all voting power;(ii) one-third or more but less than a majority of all voting power; or(iii) a majority or more of all voting power.
If this chapter applies to an issuing public corporation at the time a person makes a control share acquisition, all shares of such issuing public corporation the beneficial ownership of which is acquired by such person within ninety days before or after the date on which such person makes an acquisition of beneficial ownership of shares which results in such control share acquisition, regardless whether this chapter was in effect or applies to such corporation during such ninety day period, and all shares acquired by such person pursuant to a plan to make a control share acquisition, shall be deemed to have been acquired in the same control share acquisition for purposes of this chapter.
(2) Subject to the last paragraph of paragraph (1) of subsection (c), a “control share acquisition” does not include the acquisition of beneficial ownership of shares acquired:—(i) before June twenty-sixth, nineteen hundred and eighty-seven; provided, however, that the aggregate of shares of beneficial ownership which is acquired before such date is within a range of voting power established by paragraph (1);(ii) pursuant to a contract to acquire shares existing before June twenty-sixth, nineteen hundred and eighty-seven.
(iii) during any period after July fifteenth, nineteen hundred and eighty-seven that this chapter does not apply to the issuing public corporation pursuant to the provisions of section two;(iv) by will or pursuant to the laws of descent and distribution;(v) pursuant to the satisfaction of a pledge or other security interest created in good faith and not for the purpose of circumventing this chapter;(vi) pursuant to a tender offer, merger or consolidation, but only if such tender offer, merger or consolidation is pursuant to an agreement of merger or consolidation to which the issuing public corporation is a party; or(vii) directly from the issuing public corporation or a wholly-owned subsidiary thereof.
(3) The acquisition of beneficial ownership of shares of an issuing public corporation does not constitute a control share acquisition if the acquisition is made by or from:—(i) a person whose voting rights with respect to shares of such corporation were previously authorized by the stockholders of the corporation in compliance with this chapter, unless such acquisition, when added to all other shares of such corporation beneficially owned by the person making such acquisition, would enable such acquiring person to vote or direct the voting of shares of such corporation having voting power in the election of directors in excess of the range of voting power within which all shares beneficially owned by such person whose voting rights were previously so authorized had voting power immediately following such authorization; or(ii) a person whose previous acquisition of beneficial ownership of shares of such corporation would have constituted a control share acquisition but for paragraph (2) of subsection (c), unless such later acquisition, when added to all other shares of such corporation beneficially owned by the person making such acquisition, would entitle such acquiring person to vote or direct the voting of shares of such corporation having voting power in the election of directors in excess of the range of voting power within which the person who made such previous acquisition could exercise voting power immediately following such previous acquisition.
(d) “Interested shares”, the shares of an issuing public corporation which are beneficially owned by:—(i) any person who has acquired or proposes to acquire beneficial ownership of shares of such issuing public corporation in a control share acquisition;(ii) any officer of the issuing public corporation; or(iii) any employee of the issuing public corporation who is also a director of such corporation.
(e) “Issuing public corporation”, a corporation that has been established, organized or chartered under laws other than those of the commonwealth that has:(i) two hundred or more stockholders of record;(ii) its principal executive office within the commonwealth and more of its employees or assets, including employees or assets of its majority owned subsidiaries, employed or located in the commonwealth than in any other state as of the end of any of its four fiscal quarters immediately preceding the control share acquisition as to which the determination is being made or, if earlier, immediately preceding the date on which a control share acquisition statement relating thereto is delivered pursuant to section three; and(iii) either more than ten percent of its stockholders of record residing within the commonwealth or more than ten percent of its issued and outstanding shares owned of record by residents of the commonwealth.
The record date for determining the percentages and numbers of stockholders and shares specified in this subsection shall be the last stockholder record date before the control share acquisition as to which the determination is being made or, if earlier, before the date on which a control share acquisition statement relating thereto is filed under the provisions of section three. A stockholder record date is the date fixed by the board of directors or, if applicable, the date when transfer books are closed by the board of directors, in connection with determining stockholders entitled to notice of and vote at a meeting or to consent or dissent, to receive any dividend or other distribution, or for the purpose of any other lawful action. If a stockholder record date has not been fixed by the board of directors within the preceding four months, the determination shall be made as of the end of the issuing public corporation’s most recent fiscal quarter.
The residence of each stockholder is presumed to be the address appearing in the records of the corporation. Shares held of record by brokers or nominees shall be disregarded for purposes of calculating the percentages and numbers specified in this subsection. Any shares of an issuing public corporation allocated to the account of an employee or former employee, or beneficiary of an employee or former employee, of such corporation and held in a plan that is qualified under section 401(a) of the Internal Revenue Code of 1986, as amended, and is a defined contribution plan within the meaning of section 414(i) of said Code shall be deemed, for the purposes of clause (iii), to be held of record by the employee, former employee or beneficiary to whose account such shares are allocated.
(f) “Person”, any individual, corporation, partnership, unincorporated association or other entity, and any associate of any such person.
Section 2. (a) If the charter or bylaws of an issuing public corporation provide, at the time of a control share acquisition, that this chapter applies to control share acquisitions of shares of such corporation, shares of such corporation acquired in such control share acquisition have only such voting rights as are authorized pursuant to the provisions of section five.
(b) A corporation may amend its charter or bylaws to eliminate a provision adopted pursuant to subsection (a), in which event this chapter shall not apply to any control share acquisition respecting the stock of such corporation which occurs after the effective date of such amendment.
Section 3. Any person who has made a control share acquisition or has made a bona fide written offer to make a control share acquisition may deliver to the issuing public corporation, personally or by registered or certified mail at its principal office, a control share acquisition statement which shall contain the following:—(i) the identity of such person and any associate of such person who intends to acquire or has acquired beneficial ownership of shares of the issuing public corporation;(ii) a statement that such control share acquisition statement is being made and delivered pursuant to this chapter;(iii) the number and class or series of shares of the issuing public corporation beneficially owned by such person and each associate of such person prior to the control share acquisition;(iv) the number and class or series of shares acquired or proposed to be acquired by such person pursuant to the control share acquisition and the range of voting power to which the control share acquisition is or, if consummated, would be subject pursuant to the provisions of subsection (c) of section one;(v) a description of the terms and conditions of the proposed or completed control share acquisition, including but not limited to the prices paid by such person in the control share acquisition and the dates upon which the shares were acquired; and(vi) if the control share acquisition has not been completed, a representation by such person that such person has the financial capacity to consummate the proposed control share acquisition, together with a statement in reasonable detail of the material facts upon which such representation is based.
Section 4. (a) If the person delivering the control share acquisition statement so demands in writing contemporaneously with the delivery of such control share acquisition statement, the board of directors of the issuing public corporation, within ten days after the receipt of the demand, shall call a special meeting of stockholders for the purpose of considering whether voting rights shall be authorized for the shares acquired or to be acquired in the control share acquisition. The demand will not be effective unless accompanied by an undertaking to pay the corporation’s reasonable expenses in connection with the special meeting but not including the expenses of the corporation incurred in opposing a vote to authorize voting rights for the shares acquired or proposed to be acquired in the control share acquisition. As promptly as reasonably practicable after the board has called the special meeting, the corporation shall give written notice of the special meeting to stockholders. Such notice shall be given not less than twenty days before the date of the special meeting. Unless the person delivering the control share acquisition statement and the corporation shall agree in writing to a later date, the special meeting shall be held not more than fifty days after the receipt by the corporation of the demand. If the person delivering the control share acquisition statement so requests in the demand, the special meeting will be held no sooner than thirty days after receipt by the corporation of the demand.
(b) If no demand respecting a special meeting of the issuing public corporation’s stockholders is made in accordance with the provisions of subsection (a), consideration of the voting rights to be authorized for the shares acquired or to be acquired in the control share acquisition shall be presented at the next annual or special meeting of the corporation’s stockholders notice of which has not been given prior to the receipt by the corporation of the control share acquisition statement.
(c) The notice to the issuing public corporation’s stockholders of any annual or special meeting at which the voting rights to be accorded shares acquired or proposed to be acquired in a control share acquisition are to be considered shall be directed to all stockholders of record of the issuing public corporation as of the record date set for such meeting. Such notice shall include or be accompanied by a copy of the control share acquisition statement received by the issuing public corporation pursuant to this chapter and such other information as the issuing public corporation deems appropriate.
Section 5. Shares acquired in a control share acquisition shall have the same voting rights as all other shares of the same class or series of the issuing public corporation only to the extent authorized by vote of the stockholders of the issuing public corporation at any annual meeting of stockholders or special meeting of stockholders. Such authorization shall require the affirmative vote of the holders of a majority of all of the shares entitled to vote generally in the election of directors, excluding interested shares. Interested shares shall be disregarded for purposes of determining a quorum and shall not be entitled to vote with respect to such authorization. If no such vote is adopted, such shares shall regain their voting rights upon transfer to another person unless such transfer constitutes a control share acquisition by the acquirer, in which event the voting rights of such shares shall be subject to the provisions of this chapter.
Section 6. If the jurisdiction under the laws of which an issuing public corporation is organized has adopted or adopts any law which expressly limits, restricts or otherwise affects the voting rights of any person in the event that such person acquires or proposes to acquire shares of such issuing public corporation which exceed or meet any level or range of ownership or voting powers specified in such law, and such law contains provisions that are expressly inconsistent with the provisions of this chapter as applicable to such issuing public corporation, the provisions of this chapter shall be inapplicable to such issuing public corporation to the extent necessary to resolve such inconsistency.
Section 7. No provisions of this chapter shall be deemed to limit the power of an association or trust to amend its instrument or declaration of trust to the extent otherwise lawful.
Section 1. A corporation shall not engage in any business combination with any interested stockholder for a period of three years following the date that such stockholder became an interested stockholder, unless:(a) prior to such date the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder; or(b) upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least ninety percent of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding, those shares owned by (1) persons who are directors and also officers and (2) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or(c) on or subsequent to such date the business combination is approved by the board of directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least two-thirds of the outstanding voting stock which is not owned by the interested stockholder.
Section 2. The restrictions contained in section one shall not apply if:(a) the corporation’s original articles of organization contain a provision expressly electing not to be governed by this section;(b) the corporation, by action of its board of directors, adopts an amendment to its by-laws within ninety days of the effective date of this chapter, expressly electing not to be governed by this chapter, which amendment shall not be further amended by the board of directors;(c) the corporation, by action of its stockholders, adopts an amendment of its articles of organization or by-laws expressly electing not to be governed by this chapter; provided, however, that in addition to any other vote required by law, such amendment to the articles of organization or by-laws must be approved by the affirmative vote of a majority of the shares entitled to vote. An amendment adopted pursuant to this paragraph shall not be effective until twelve months after the adoption of such amendment and shall not apply to any business combination between such corporation and any person who became an interested stockholder of such corporation on or prior to the date of such adoption. A by-law amendment adopted pursuant to this paragraph shall not be further amended by the board of directors;(d) the corporation does not have two hundred or more stockholders of record;(e) the corporation does not have: (1) its principal executive office or substantial assets within the commonwealth unless as a result of action taken directly or indirectly by an interested stockholder; and (2) either more than ten percent of its stockholders of record residing within the commonwealth or more than ten percent of its issued and outstanding shares owned of record by residents of the commonwealth.
The record date for determining the percentages and numbers of stockholders and shares specified in subsections (d) and (e) shall be the last stockholder record date before any stockholder became an interested stockholder. A stockholder record date is the date fixed by the board of directors or, if applicable, the date when transfer books are closed by the board of directors, in connection with determining stockholders entitled to notice of and vote at a meeting, or to consent or dissent, to receive any dividend or other distribution, or for the purpose of any other lawful action. If a stockholder record date has not been fixed by the board of directors within the preceding four months, the determination shall be made as of the end of the corporation’s most recent fiscal quarter. The residence of each stockholder is presumed to be the address appearing in the records of the corporation. Shares held of record by brokers or nominees shall be disregarded for purposes of calculating the percentages and numbers specified in this subsection. Any shares of a corporation allocated to the account of an employee or former employee, or beneficiary of an employee or former employee, of such corporation and held in a plan that is qualified under section 401(a) of the Internal Revenue Code of 1986, as amended, and is a defined contribution plan within the meaning of section 414(i) of said Code shall be deemed, for the purposes of clause (ii), to be held of record by the employee, former employee or beneficiary to whose account such shares are allocated.
In the case of a corporation which is an association or trust, references to “articles of organization” mean the instrument or declaration of trust; references to “by-laws” include publicly announced resolutions of the directors; references to “directors” mean the individuals performing similar functions; and references to the “corporation” or “such corporation” mean the association or trust.
(f) a stockholder becomes an interested stockholder inadvertently and (1) as soon as practicable divests sufficient shares so that the stockholder ceases to be an interested stockholder; and (2) would not, at any time within the three year period immediately prior to a business combination between the corporation and such stockholder, have been an interested stockholder but for the inadvertent acquisition; or(g) the business combination is proposed prior to the consummation or abandonment of and subsequent to the earlier of the public announcement or the notice required hereunder of a proposed transaction which: (1) constitutes one of the transactions described in clause (ii) of paragraph (3); (2) is with or by a person who either was not an interested stockholder during the previous three years or who became an interested stockholder with the approval of the corporation’s board of directors; and (3) is approved or not opposed by a majority of the members of the board of directors then in office, but not less than one, who were directors prior to any person becoming an interested stockholder during the previous three years or were recommended for election or elected to succeed such directors by a majority of such directors. The proposed transactions referred to in the preceding sentence shall be limited to:(i) a merger or consolidation of the corporation, except for a merger in respect of which, pursuant to section 11.
05 of chapter 156D, no vote of the stockholders of the corporation is required;(ii) a sale, lease, exchange, mortgage, pledge, transfer or other disposition, in one transaction or a series of transactions, whether as part of a dissolution or otherwise, of assets of the corporation or of any direct or indirect majority-owned subsidiary of the corporation, other than to any direct or indirect wholly-owned subsidiary or to the corporation, having an aggregate market value equal to fifty percent or more of either that aggregate market value of all of the assets of the corporation determined on a consolidated basis or the aggregate market value of all the outstanding stock of the corporation; or(iii) a proposed tender or exchange offer for fifty percent or more of the outstanding voting stock of the corporation.
The corporation shall give not less than twenty days notice to all interested stockholders prior to the consummation of any of the transactions described in clause (i) or (ii) of paragraph (3) of subsection (g).
Notwithstanding the provisions of subsections (a), (b), (c) and (d), a corporation may elect by a provision of its original articles of organization or any amendment thereto to be governed by this chapter; provided, however, that any such amendment to the articles of organization shall not apply to restrict a business combination between the corporation and an interested stockholder of the corporation if the interested stockholder became such prior to the effective date of this chapter.
Section 3. As used in this chapter, the following words, unless the context clearly requires otherwise, shall have the following meanings:—(a) “Affiliate”, a person that directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, another person.
(b) “Associate”, when used to indicate a relationship with any person:(1) any corporation or organization of which such person is a director, officer or partner or is, directly or indirectly, the owner of twenty percent or more of any class of voting stock; (2) any trust or other estate in which such person has at least a twenty percent beneficial interest or as to which such person serves as trustee or in a similar fiduciary capacity; and (3) any relative or spouse of such person, or any relative of such spouse, who has the same residence as such person.
(c) “Business combination”, when used in reference to any corporation and any interested stockholder of such corporation:(1) any merger or consolidation of the corporation or any direct or indirect majority-owned subsidiary of the corporation with (i) the interested stockholder, or (ii) any other corporation if the merger or consolidation is caused by the interested stockholder;(2) any sale, lease, exchange, mortgage, pledge, transfer or other disposition, in one transaction or a series of transactions, except proportionately as a stockholder of such corporation, to or with the interested stockholder, whether as part of a dissolution or otherwise, of assets of the corporation or of any direct or indirect majority-owned subsidiary of the corporation which assets have an aggregate market value equal to ten percent or more of either the aggregate market value of all the assets of the corporation determined on a consolidated basis or the aggregate market value of all the outstanding stock of the corporation;(3) any transaction which results in the issuance or transfer by the corporation or by any direct or indirect majority-owned subsidiary of the corporation of any stock of the corporation or of such subsidiary to the interested stockholder, except:(i) pursuant to the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into stock of such corporation or any such subsidiary which securities were outstanding prior to the time that the interested stockholder became such;(ii) pursuant to a dividend or distribution paid or made, or the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into stock of such corporation or any such subsidiary which security is distributed pro rata to all holders of a class or series of stock of such corporation subsequent to the time the interested stockholder became such;(iii) pursuant to an exchange offer by the corporation to purchase stock made on the same terms to all holders of such stock; or(iv) an issuance or transfer of stock by the corporation; provided, however, that in no case under clauses (ii) to (iv), inclusive, shall there be an increase in the interested stockholder’s proportionate share of the stock of any class or series of the corporation or of the voting stock of the corporation;(4) any transaction involving the corporation or any direct or indirect majority-owned subsidiary of the corporation which has the effect, directly or indirectly, of increasing the proportionate share of the stock of any class or series, or securities convertible into the stock of any class or series of the corporation or any such subsidiary which is owned by the interested stockholder, except as a result of immaterial changes due to fractional share adjustments or as a result of any purchase or redemption of any shares of stock not caused, directly or indirectly, by the interested stockholder; or(5) any receipt by the interested stockholder of the benefit, directly or indirectly, except proportionately as a stockholder of such corporation, of any loans, advances, guarantees, pledges or other financial benefits, other than those expressly permitted in paragraphs (1) to (4), inclusive, provided by or through the corporation or any direct or indirect majority-owned subsidiary.
(d) “Confidentiality”, for the purpose of paragraph (2) of subsection (b) of subsection 1 that the corporation’s management, excluding any independent plan trustee, has no knowledge as to whether employee participants in employee stock plans have tendered their shares in a tender or exchange offer.
(e) “Control”, including the term “controlling”, “controlled by” and “under common control with”, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting stock, by contract or otherwise. A person who is the owner of twenty percent or more of a corporation’s outstanding voting stock shall be presumed to have control of such corporation, in the absence of proof by a preponderance of the evidence to the contrary. Notwithstanding the foregoing, a presumption of control shall not apply where such person holds voting stock, in good faith and not for the purpose of circumventing this chapter, as an agent, bank, broker, nominee, custodian or trustee for one or more owners who do not individually or as a group have control of such corporation.
(f) “Corporation”, a corporation to which the provisions of paragraph (1) of section 17.
01 of chapter 156D apply, a gas or electric company or combined gas and electric company to which section 3 of chapter 164 applies or an association or trust which owns beneficially a majority of the common stock of such a company or a trust company to which the provisions of chapter 172 apply, a savings bank in stock form to which certain provisions of said chapter 172 apply pursuant to section 34C of chapter 168, or a cooperative bank in stock form to which certain provisions of said chapter 172 apply pursuant to section 26C of chapter 170.
(g) “Interested stockholder”, any person other than the corporation and any direct or indirect majority-owned subsidiary of the corporation, that:(1) is the owner of five percent or more of the outstanding voting stock of the corporation; or(2) is an affiliate or associate of the corporation and was the owner of five percent or more of the outstanding voting stock of the corporation at any time within the three year period immediately preceding the date on which it is sought to be determined whether such person is an interested stockholder; and the affiliates and associates of such person; provided, however, that the term “interested stockholder” shall not include:(i) any person who (A) owned shares in excess of the five percent limitation set forth herein as of, or acquired such shares pursuant to a tender offer commenced prior to, the effective date of this chapter or pursuant to an exchange offer announced prior to the aforesaid date and commenced within ninety days thereafter and continued to own shares in excess of such five percent limitation or would have but for action by the corporation; or (B) acquired said shares from a person described in subclause (A) by gift, inheritance or in a transaction in which no consideration was exchange; or(ii) any person whose ownership of shares in excess of the five percent limitation set forth herein is the result of action taken solely by the corporation; provided, however, that such person shall be an interested stockholder if thereafter he acquires additional shares of voting stock of the corporation, except as a result of further corporate action not caused, directly or indirectly, by such person. For the purpose of determining whether a person is an interested stockholder, the voting stock of the corporation deemed to be outstanding shall include stock deemed to be owned by the person through application of subsection (j) but shall not include any other unissued stock of such corporation which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options or otherwise.
Notwithstanding the foregoing provisions, the applicable percentage for purposes of this paragraph shall be fifteen percent in place of five percent for a person eligible to file schedule 13-G under the rules of the Securities and Exchange Commission with respect to securities of the corporation as long as such person continues to be so eligible.
(h) “Owner”, including the terms “own” and “owned”, when used with respect to any stock, a person that individually or with or through any of its affiliates or associates: (1) beneficially owns such stock, directly or indirectly; or (2) has (i) the right to acquire such stock, whether such right is exercisable immediately or only after the passage of time, pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, warrants or options or otherwise; provided, however, that a person shall not be deemed the owner of stock tendered pursuant to a tender or exchange offer made by such person or any of such person’s affiliates or associates until such tendered stock is accepted for purchase or exchange; or (ii) the right to vote such stock pursuant to any agreement, arrangement or understanding; provided, however, that a person shall not be deemed the owner of any stock because of such person’s right to vote such stock if the agreement, arrangement or understanding to vote such stock arises solely from a revocable proxy or consent given in response to a proxy or consent solicitation made to ten or more persons; or (3) has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting, except voting pursuant to a revocable proxy or consent as described in subclause (ii) of paragraph (2) of this subsection, or disposing of such stock with any other person that beneficially owns, or whose affiliates or associates beneficially own, directly or indirectly, such stock.
(i) “Person”, any individual, corporation, partnership, unincorporated association or other entity.
(j) “Voting stock”, stock of any class or series entitled to vote generally in the election of directors.
Section 4. No provision of a corporation’s articles of organization or by-laws shall require, for any vote of stockholders required by this chapter, a greater vote of stockholders than that specified in this chapter.
Section 1. This chapter may be cited as “The Uniform Electronic Transactions Act”.
Section 18. The chief information officer and the supervisor of records shall encourage and promote consistency and interoperability with other governmental agencies and nongovernmental persons. If appropriate, they may specify differing levels of standards from which governmental agencies of the commonwealth may choose in implementing the most appropriate standard for a particular application. Section 1. In this chapter, the following words and terms, unless the context otherwise requires, shall have the following meanings:—“Auction” or “Public auction”, any sale, coming within its ordinary meaning, by public outcry, including in addition thereto, any sale by public outcry where property is offered first at a stated price and thereafter successively or gradually at lower prices until an acceptor or purchaser is found.
“Auctioneer”, any person who, for a fee, commission, profit or any other valuable consideration, or with the intention or expectation of receiving the same, by means of, or process of, an auction or sale at auction, offers, negotiates or attempts to negotiate, a listing contract, sale, purchase or exchange of goods, chattels, merchandise, real or personal property, or of any other commodity which may lawfully be kept or offered for sale by or at public auction.
“Auctioneering”, the business or act of selling real, personal or mixed property by successive, competitive bids.
“Deputy director”, the deputy director of standards in the office of consumer affairs and business regulation.
“Goods”, any chattels, livestock, merchandise, real or personal property, or commodities of any form or type which may be lawfully kept or offered for sale.
“Local auction permit agent”, the person or persons so designated in a city by the mayor or in a town by the board of selectmen, or upon a failure to so designate or in the absence, incapacity or unavailability of any person or persons so designated, the chief of police.
“Person”, individuals, associations, partnerships and corporations, and the officers, directors and employees of a corporation.
Section 10. No person shall conduct an auction without a special or annual permit issued by the city or town in which the auction is to be conducted. Application for such a permit shall be filed with the local auction permit agent and shall contain the name of the applicant; the name, address and license number of the auctioneer; the hours between which the auction is to be conducted; the location of the auction; and a general description of the goods to be auctioned. As to a special permit, the estimated value of the goods and the date or dates, not to exceed ten, on which the auction shall be held shall also be included.
Within six business days of the filing of an application for a special permit, the local auction permit agent shall either approve the permit subject to stated reasonable terms and conditions relating to public safety as he may establish, or deny the application on stated grounds, which must be reasonable grounds relating to public safety. Failure of an agent to act within the six business day period shall constitute approval of the application. Upon approval, express or implied, the applicant shall tender to the city or town treasurer the permit fee established by said agent, which fee shall be reasonable.
No person shall be eligible for an annual permit unless he maintains a regular place of business for the conduct of auctioneering in the city or town. Said permit shall be issued or denied on the same terms applicable to a special permit, except that an application which is not acted upon within fourteen days of the date of filing with the local auction permit agent shall be deemed approved. Each annual permit issued shall be valid for a term of one year commencing on the date of the express or implied approval of the application therefor. Any applicant for a special or annual permit who is aggrieved by the action of the local auction permit agent on his application shall be entitled to a public hearing by the appointing authority of the agent in accordance with the provisions of chapter thirty A.
Section 11. The provisions of this chapter shall not apply to any auction held or conducted by an order or judgment of any court of the commonwealth or of the United States or by any officer of a municipality, county or state of the United States; sales held by sheriffs, deputy sheriffs, constables, collectors of taxes, executors, administrators, lien holders, assignees for the benefit of creditors; sales by any other person specifically authorized by law to sell real, personal or mixed property; casual and isolated sales by an owner of his own goods; and any auction held or conducted by any resident member of a charitable, educational, religious or other nonprofit organization within the commonwealth; provided, however, that any person acting as agent for any of the foregoing shall be subject to all of the provisions of this chapter except section ten.
Section 12. Any person violating any of the provisions of this chapter may be fined not more than one thousand dollars or by imprisonment for not more than six months, or both.
Section 13. The division may make and, from time to time alter, amend or repeal rules and regulations for the conduct of auctioneers in the commonwealth not inconsistent with this chapter or any other general or special law.
Section 2. Except as otherwise provided, no person shall engage in the business of or act as an auctioneer in the commonwealth, directly or indirectly, either temporarily or as an incident to any other transaction, unless licensed under the provisions of this chapter.
Section 3. Any person desiring to be licensed as an auctioneer shall make written application, under oath, to the deputy director on a form provided by him. Said application shall set forth the name and address of the applicant and of any other person having a financial interest, direct or indirect, in the business to be conducted by the applicant. Said application shall be accompanied by evidence satisfactory to the deputy director that the applicant is a citizen of the United States, has attained the age of eighteen years, has successfully completed a course of study at a school recognized by the deputy director, and has successfully completed a written examination in accordance with the provisions of section three A of this chapter. Said application shall be accompanied by a license fee in the amount of one hundred dollars, or such other amount as the secretary of administration and finance pursuant to the provisions of section three B of chapter seven shall establish, together with two letters of recommendation for licensure signed by a licensed auctioneer, and elected public official, or member of the Massachusetts bar.
Said application shall be further accompanied by a bond upon the applicant in the sum of ten thousand dollars, or such other amount as provided by regulation, payable to the deputy director or his successors with sureties approved by the deputy director, and conditioned upon applicant’s compliance with the provisions of this chapter. Said bond shall guarantee the payment of all fines and penalties incurred by applicant as a licensee for his violations of the said provisions, and also guarantee the payment or satisfaction of any final judgements on claims by creditors against the licensee arising in connection with business conducted under a license granted under this chapter. All such payments under said bond being limited to the amount of said bond. Such a creditor’s claim, however, must have been duly filed by giving written notice to the deputy director prior to the expiration of sixty days from the return or surrender of said license or date of the filing of an affidavit of loss of the license held by the licensee against whom the claim is made.
The acceptance by an applicant of a license issued by the deputy director to him as a licensee shall be deemed equivalent to an appointment by the licensee of the deputy director, or his successors in office, to be the licensee’s true and lawful attorney upon whom may be served all lawful process in any action or proceeding against him under said license. Any process against the licensee so served shall, if said licensee is notified as hereinafter provided, be of the same legal force and validity as if served on him personally, and the mailing by the deputy director of a copy of such process to said licensee at his last address, as appearing on the deputy director’s records, shall be sufficient notice to him of such service. Service of such process shall be made by delivering or mailing duplicate copies thereof together with a fee of two dollars to the office of the deputy director, and the deputy director shall forthwith send one of said copies by mail, postage prepaid, addressed to the defendant licensee named in such process at his last address as appearing on the deputy director’s records.
An affidavit of the deputy director, or of any person authorized by him to send such copy, that such copy has been mailed shall be prima facie evidence thereof. One of the duplicates of such process, certified by the deputy director as having been delivered to the office of the deputy director, shall be sufficient evidence of service upon him as attorney for the licensee named as defendant in the process.
Section 3A. There shall be a written examination process to license auctioneers in the commonwealth. Such examination shall be administered by an independent testing service designated by the deputy director. All fees and costs required for examination shall be paid by the applicant directly to the independent testing service. Such examination shall be administered no less than one time per year at a location to be determined by the designated independent testing service subject to the approval of the deputy director. Such examination shall be conducted by the designated independent testing service under the direct supervision of the deputy director. No license shall be issued to any person who has not demonstrated through said written examination that he possesses the following:(1) appropriate knowledge of technical terms commonly used in or related to auctioneering;(2) an understanding of the problems likely to be encountered in carrying out an auction;(3) appropriate reading comprehension, writing and spelling skills, knowledge of basic mathematics;(4) understanding of the types of misconduct for which disciplinary proceedings may be initiated against a state licensed auctioneer; provided, however, that an auctioneer licensed by the commonwealth as of July first, nineteen hundred and ninety-six shall retain such license.
Section 3B. A nonresident individual may be licensed as an auctioneer upon conforming to all pertinent provisions of this chapter, provided that the division may exempt from the written examination prescribed in section three A an auctioneer duly licensed in any other state of the United States under the laws of which there are equivalent requirements for licensure.
Section 3C. A license shall be valid for a period of one year from the date of issue unless sooner suspended or revoked and shall be renewed by the division annually thereafter without examination, upon payment of the fee prescribed in section three. Applications for renewals of licenses shall be signed and sworn to by the applicant and shall be made on forms furnished by the division. Such application forms shall be mailed by the division to each auctioneer registered with the division, together with notice of the expiration of his license, not less than thirty days prior to such expiration.
Section 4. No license application conforming to the requirements of sections three and three A shall be denied except after a public hearing held by the deputy director in accordance with and subject to the provisions of chapter thirty A. No such application shall be denied except upon a finding by the deputy director after said hearing of one or more of the following grounds for denial: (a) that the applicant has been convicted of a felony; (b) that the applicant has followed a continuous and flagrant course of misrepresentations or the making of false promises, through agents, advertising or otherwise, in the conduct of auctioneering or otherwise; or (c) that the applicant has failed to meet or has violated any of the requirements for licensees set forth in this chapter. Upon denial of an application, the deputy director shall surrender to the applicant the bond filed with his application within the time set forth.
Section 5. Each license issued by the deputy director shall bear a number, shall be valid for one year from the date of its issuance, may be renewed upon application to the deputy director on a form provided by him, shall not be transferable, and may be exercised only by the licensee; provided, however, that the licensee may employ agents to conduct auctioneering under licensee’s immediate direction and control.
Section 6. Prior to its expiration date, a license may be suspended or revoked by the deputy director in accordance with the procedure and on the grounds set forth in section four, or may be terminated by voluntary surrender by the licensee.
Upon the expiration, termination or surrender of a license, the licensee shall deliver the license to the deputy director who shall cancel the license, endorse the date of expiration, termination or surrender and shall, after a sixty-day period from the date of delivery or after all claims made against the licensee have been satisfied or settled, surrender the licensee’s bond and so notify the surety on the bond.
If a license is lost, misplaced or destroyed, the licensee shall file an affidavit to that effect and the deputy director shall issue a replacement license, clearly identified as such on the license and in the records of the deputy director.
Section 7. The deputy director shall keep on file, in convenient form and open to public inspection, all license applications and copies of licenses issued and shall annually publish a list of names and addresses of all auctioneers licensed by him, and the names of all persons whose licenses have been revoked, suspended or surrendered during the period and the specific time for which such suspension, revocation or surrender became effective.
Section 8. Each licensee shall keep a complete and accurate account of all goods and chattels sold by him, including the names and addresses of the persons from whom they were received. Each licensee shall be responsible for the reporting and collection of sales and use taxes for all sales made by him.
Section 9. No licensee or other person shall: (a) sell or offer for sale at auction goods known by him to be owned by a minor; (b) advertise an auction or goods for sale at an auction in the commonwealth without including the number of the license issued by the deputy director as a part of the advertisement; (c) advertise for sale or sell goods at auction falsely representing that said goods are, in whole or in part, bankrupt or insolvent stock or damaged goods saved from fire, or otherwise falsely represent or mislead any person as to their origin, history or condition; (d) sell, offer for sale or give away in connection with an auction, any goods as prize packages, gifts, premiums or bonus or otherwise as an inducement to purchase any other goods; (e) sell, offer for sale or dispose of goods at auction by chance or lot, or without first exhibiting to prospective bidders all such goods, including those in packages, bundles or containers, except as to auctions of unclaimed articles; (f) employ or knowingly allow, directly or indirectly, any person to act at any auction as a “capper” or “by bidder” or in any like capacity, for the purpose of bidding up the price of any goods in competition with bona fide bidders or for the purpose of encouraging or enticing bona fide bidders to purchase, or for the purpose of stimulating competitive bidding or sales; or personally act in such capacity; (g) make or knowingly accept any false bid to buy, or pretend to sell or buy goods; or (h) knowingly allow any individual who is not licensed to call for bids; provided, however, that an auctioneer may allow an individual who is not licensed to call for bids when such individual is under the direct supervision of an auctioneer licensed in accordance with the provisions of this chapter.
Section 1. As used in this chapter, the following words, unless the context clearly requires otherwise, shall have the following meanings:“Deputy director”, the deputy director of standards in the office of consumer affairs and business regulation.
“Registered motor vehicle repair shop”, a motor vehicle repair shop which has a current valid certificate of registration issued hereunder.
“Motor vehicle repair”, the business or act of repairing damaged motor vehicles in the commonwealth for compensation.
“Motor vehicle repair shop”, any person or entity which, for compensation, or with the intention or expectation of receiving the same, repairs or undertakes to repair in the commonwealth a damaged motor vehicle as defined in section thirty-four A of chapter ninety.
“Person”, individuals, associations, partnerships and corporations, and the officers, directors and employees of a corporation.
“Unregistered motor vehicle repair shop”, a motor vehicle repair shop which does not have a current valid certificate of registration issued hereunder, which has had its registration revoked or suspended, or which has surrendered its certificate of registration hereunder.
Section 10. Any person violating any of the provisions of this chapter may be punished by a fine of not more than one thousand dollars or by imprisonment for not more than six months, or both. Such fine may be imposed by the deputy director, after hearing, or in a civil or criminal action brought by the attorney general. Violation of any of the provisions of this chapter shall constitute a violation of chapter ninety-three A.
In addition to any other penalties provided herein, whenever the deputy director determines that a person who is required to be registered hereunder has failed to so register, the deputy director may serve a stop work order on said person, requiring the cessation of all business operations. Such order shall take effect five days after the date of service upon such person. Any person who is aggrieved by the imposition of a stop work order shall have five days from the date of service to appeal such order, and shall thereafter be granted a hearing by the deputy director within five days of receipt of appeal. If the deputy director finds at the hearing that the person was required to be registered, and failed to register, the stop work order shall be effective immediately on the conclusion of the hearing, and shall remain in effect until the person becomes properly registered. Any law enforcement agency in the commonwealth shall, at the request of the deputy director, render any assistance necessary to carry out the provisions of this paragraph, including but not limited to preventing any employee or other person from remaining at the place of business after a stop work order has taken effect.
Section 2. No person shall engage in motor vehicle repair unless such person is registered as a motor vehicle repair shop under this chapter. Any person desiring to be registered as a motor vehicle repair shop shall make written application under oath to the deputy director on a form provided by him. Said application shall set forth the name and address of the applicant and of any other person having financial interest, direct or indirect, in the business to be conducted by the applicant, and such other information as the deputy director shall require, and shall identify at least one natural person who is in charge of the operations of the applicant. Said application shall be accompanied by a registration fee in the amount of three hundred dollars, or such other amount as the secretary of administration and finance pursuant to the provisions of section three B of chapter seven shall establish, together with two letters of recommendation for registration signed by a registered motor vehicle repair shop or by an elected public official or a member of the Massachusetts Bar. Said application shall be further accompanied by a bond upon the applicant in the sum of ten thousand dollars, payable to the deputy director or his successors with sureties approved by the deputy director and conditioned on applicant’s compliance with the provisions of this chapter. Said bond shall guarantee the payment of all fines and penalties incurred by applicant as a registered motor vehicle repair shop for his violations of the said provisions, and also guarantee the payment or satisfaction of any final judgments on claims by creditors against the registered motor vehicle repair shop arising in connection with business done under a certificate or registration granted under this chapter, all such payments under said bond to be limited to the amount of said bond. Such a creditor’s claim however, must have been duly filed by giving written notice to the deputy director prior to the expiration of sixty days from the return, surrender of said certificate of registration or date of the filing of an affidavit of loss of the certificate of registration held by the registered motor vehicle repair shop against whom the claim is made.
The acceptance by an applicant of a certificate of registration issued by the deputy director to him as a registered motor vehicle repair shop shall be deemed equivalent to an appointment by the registrant of the deputy director, or his successors in office, to be the registrant’s true and lawful attorney upon whom may be served all lawful process in any action or proceeding against him or his executor or administrator, arising out of the transaction of business by him under said certificate of registration. Any process against the registrant so served shall, if said registrant is notified as hereinafter provided, be of the same legal force and validity as if served on him personally, and the mailing by the deputy director of a copy of such process to said registrant at his last address, as appearing on the deputy director’s records, shall be sufficient notice to him of such service. Service of such process shall be made by delivering or mailing duplicate copies thereof together with a fee of two dollars to the office of the deputy director, and the deputy director shall forthwith send one of said copies by mail, postage prepaid, addressed to the defendant registrant named in such process at his last address as appearing on the deputy director’s records.
An affidavit of the deputy director, or of any person authorized by him to send such copy, that such copy has been mailed shall be prima facie evidence thereof. One of the duplicates of such process, certified by the deputy director as having been delivered to the office of the deputy director shall be sufficient evidence of service upon him as attorney for the registrant named as defendant in the process.
Section 2A. Notwithstanding the provisions of section two, the requirement of a bond may be satisfied by the submission of a letter of credit in the amount of ten thousand dollars, in a form approved by the deputy director. Said letter of credit shall accompany the written application prescribed in section two and the applicant shall comply with all other requirements of said section.
Section 3. No application for registration conforming to the requirements of section two shall be denied except after a public hearing held by the deputy director in accordance with and subject to the provisions of chapter thirty A. No such application shall be denied except upon a finding by the deputy director after said hearing of one or more of the following grounds for denial: (a) that the applicant or any person having a financial interest, direct or indirect, in the business to be conducted by the applicant, has been convicted within the most recent five year period from the date of the application of a felony which may reflect upon his suitability to own or operate; (b) that the applicant or any person having a financial interest, direct or indirect, in the business to be conducted by the applicant, has followed a continuous and flagrant course of misrepresentations or the making of false promises, through advertising or otherwise, in the conduct of motor vehicle repair or otherwise; (c) that the applicant, any person having a financial interest direct or indirect, in the business to be conducted by the applicant, or any registered or previously registered motor vehicle repair shop in which the applicant or such person has or had a financial interest, direct or indirect, has failed to meet or has violated any of the requirements for registered motor vehicle repair shops set forth in this chapter or (d) that the applicant, any person having a financial interest, direct or indirect, in the business to be conducted by the applicant, or any registered or previously registered motor vehicle repair shop in which the applicant or such person has or had a financial interest, direct or indirect, has had registration hereunder denied, revoked, suspended or surrendered during the previous five years. Upon denial of an application, the deputy director shall surrender to the applicant the bond filed with his application within the time set forth, but shall not refund the registration fee.
Section 4. Each certificate of registration issued by the deputy director shall bear a number, shall be valid until June first of the third year after issuance, may thereafter be renewed for a three year period upon application to the deputy director on a form provided by him, shall not be transferable, and may be exercised only by the person whose name appears on the certificate; provided, however, that the registered motor vehicle repair shop may employ unregistered individuals to repair motor vehicles under the registrant’s immediate direction and control.
Section 5. Prior to its expiration date, a certificate of registration may be suspended or revoked by the deputy director in accordance with the procedure and on the grounds set forth in section three or eight, or may be terminated by voluntary surrender by the registrant.
Upon the expiration, termination or surrender of a certificate of registration, the registrant shall deliver the certificate of registration to the deputy director who shall cancel the registration, endorse the date of expiration, termination or surrender on the certificate and shall, after a sixty-day period from the date of delivery or after all claims made against the registrant have been satisfied or settled, surrender the registrant’s bond and so notify the surety on the bond.
If a certificate of registration is lost, misplaced or destroyed, the registrant shall file an affidavit to that effect and the deputy director shall issue a replacement certificate, clearly identified as such on the certificate and in the records of the deputy director.
Section 6. The deputy director shall keep on file in convenient form and open to public inspection, all applications for registration and copies of certificates of registration issued and shall annually publish a list of names and addresses of all motor vehicle repair shops registered by him, and the names of all persons whose registration has been revoked, suspended or surrendered during the period and the specific time for which such suspension, revocation or surrender became effective.
Section 7. Every registered motor vehicle repair shop shall publicly display in its place of business its current certificate of registration. No unregistered motor vehicle repair shop shall display in its place of business any certificate of registration or copy or facsimile of a certificate of registration, nor shall it in any manner state that it is, or hold itself out to be, a registered motor vehicle repair shop.
Section 8. No registered motor vehicle repair shop or other person shall: (a) advertise for motor vehicle repair in the commonwealth without including the number of its certificate of registration issued by the deputy director as a part of the advertisement; (b) with respect to any repair paid for in whole or in part by an insurer, fail to charge all or any part of the applicable deductible to be paid by the insured, or give any rebate, gift, prize, premium, bonus, fee or any other monetary or tangible thing to the insured or any other person not in the employ of the repair shop as an inducement to have the repair made at the repair shop; (c) charge or offer to charge a higher rate or discount for an insured repair than for an uninsured repair; (d) make any false or fraudulent statement in connection with any repair or attempt to collect for a repair; (e) without lawful authority, prevent the owner of a motor vehicle from recovering the same.
Section 9. (a) Every registered motor vehicle repair shop shall keep, or cause to be kept, in a book a proper record of every motor vehicle which enters and which leaves his place of business. A proper record shall include, but not be limited to, a description of the motor vehicle, the vehicle identification number, the date received, the name and residences of the person from and for whom the vehicle was received and a signed authorization for the work to be performed on said vehicle. Records shall also be kept of purchases of all major component parts, motor transmission, any body parts and parts for the interior. Records must be kept of all purchases made during at least the preceding eighteen months.
(b) Any registered shop whose business consists primarily of the changing and replacing of the fluids of a motor vehicle shall be exempt from keeping the record book referred to above, if and so long as the registered shop keeps adequate records of the repairs and services performed with respect to the motor vehicles which come into its custody.
(c) Said record book shall be kept in a convenient place, and along with the premises of the repair shop or body shop, may be inspected at any time by any city, state or federal law enforcement officer.
Section 1. The following words shall for the purposes of this chapter have the following meanings, unless the context requires otherwise:—“Deputy director”, the deputy director of standards in the office of consumer affairs and business regulation.
“Transient vendor”, any person, either principal or agent, who engages in a temporary or transient business in the commonwealth selling goods, wares or merchandise, either in one locality or in traveling from place to place.
“Temporary or transient business”, any exhibition and sale of goods, wares or merchandise which is carried on in any tent, booth, building or other structure, unless such place is open for business during usual business hours for a period of at least twelve consecutive months.
Section 10. If a person liable for the license fee required by section five refuses or neglects to pay the same after demand by the clerk of the town in which he intends to sell goods, wares and merchandise, the clerk may maintain an action of contract therefor in his own name for the benefit of such town.
Section 11. Upon the expiration and return, or surrender before expiration, of each state license, the deputy director shall cancel the same, endorse the date of return or surrender thereon, and place the same on file. If a license is lost he may accept in lieu of the return or surrender thereof an affidavit to that effect, which shall be so endorsed and filed. He shall hold the special deposit of the licensee for sixty days after the return or surrender of the license or the filing of such affidavit and, after satisfying or making provision in accordance with the following section for all claims made upon the same under said section, shall return the surplus, if any, to said licensee; or, if said licensee has given a bond in lieu of said deposit, the deputy director shall, after said sixty days and after all claims made under the following section have been satisfied or settled, cancel said bond and notify said licensee and the surety on said bond.
Section 12. Each deposit made with the deputy director shall, during the term of the licensee’s license and for sixty days after the return or surrender thereof or the filing of an affidavit of its loss, be subject to attachment and execution in behalf of any creditor of the licensee whose claim arises in connection with the business done under his state license and who gives notice of such claim to the deputy director during such period, and the deputy director may be held to answer as trustee, under the trustee process, in any civil action in contract or tort brought against said licensee for such claim and shall pay over upon execution such amount of money as he may be chargeable with upon his answer. Said deposit shall also be subject to the payment of any fine or penalty imposed on the licensee for violation of any provision of the eleven preceding sections; provided, that written notice of the name of said licensee and of the amount of such fine or penalty is given during such period to the deputy director by the clerk of the court in which, or the trial justice by whom, such fine or penalty was imposed. No payment of any part of said deposit shall be made to the licensee unless so much thereof is retained as is required to discharge all claims, fines and penalties of which notices have been given to the deputy director as herein provided and which remain undecided or unpaid. Upon the giving of notice as herein provided, a bond given in lieu of such deposit may be put in suit by any such creditor to recover the amount of such claim or by any such clerk of court or trial justice to recover the amount of such fine or penalty. If the licensee has made a deposit, the deputy director shall, until said deposit is exhausted, pay or make provision for the payment of all such claims, fines and penalties in the order in which notices thereof were received by him. If the licensee has given a bond, the order in which persons entitled to all such claims, fines and penalties shall recover on the bond shall, until the penal sum of the bond is exhausted, be determined by the order in which notices thereof were received by the deputy director.
Section 12A. The selectmen in a town or in a city such board or officer as may be designated by ordinance, may, under such conditions as they may deem proper, grant to any organization engaged in charitable work or to a post of any incorporated organization of veterans who served in the military or naval service of the United States in time of war or insurrection a special license authorizing it, for a particular time period not to exceed a total of four days to be stated in such license, and for a charitable purpose stated in such license, to conduct under their control a temporary or transient business in which transient vendors participating in such sales shall not be subject to the provisions of sections three to twelve, inclusive. Cities and towns may regulate such sales by ordinance, by-law or by local rules and regulations as may be made in a city by the mayor and city council and in a town by the selectmen. The exercise of the licenses hereby provided for shall be subject to the provisions of all statutes, ordinances, by-laws, rules and regulations not inconsistent herewith.
Chapter 101: Section 13. Definitions Section 13. Except as hereinafter expressly provided, the terms “hawker” and “pedler” as used in this chapter shall mean and include any person, either principal or agent, who goes from town to town or from place to place in the same town selling or bartering, or carrying for sale or barter or exposing therefor, any goods, wares or merchandise, either on foot, on or from any animal or vehicle.
Chapter 101: Section 14. Unauthorized sales Section 14. A hawker or pedler who sells or barters or carries for sale or barter or exposes therefor any goods, wares or merchandise, except as permitted by this chapter, shall forfeit not more than two hundred dollars, to be equally divided between the commonwealth and the town in which the offence was committed.
Chapter 101: Section 15. Application of chapter Section 15. The provisions of this chapter relating to hawkers and peddlers shall not apply to wholesalers or jobbers selling to dealers only, nor to commercial agents or other persons selling by sample, lists, catalogues or otherwise for future delivery, nor to any dealer regularly engaged in supplying customers with fuel oil for heating or cooking purposes from a fixed place of business within the commonwealth and who does not customarily solicit direct sales from house to house or by means of outcry, sign or signal, nor to any person who peddles only fish obtained by his own labor or that of his family, fruits, vegetables or other farm products raised or produced by himself or his family, nor to persons selling articles for charitable purposes under section thirty-three, nor to persons licensed under section forty of chapter ninety-four with respect to the sale by them of eggs, or milk, skimmed milk, cream, butter, cheese or other milk products, except frozen desserts as defined in section sixty-five G of said chapter ninety-four.
Chapter 101: Section 16. Sale of certain articles; temporary licenses Section 16. The sale by hawkers or pedlers of jewelry, furs, wines or spirituous liquors, small artificial flowers or miniature flags is prohibited. This prohibition shall not apply to costume jewelry, so called, with a dollar value of not more than ten dollars per piece made by a nonprofit or charitable organization. Nothing in this section shall be construed to prevent the granting of temporary licenses under section thirty-three for the sale of small artificial flowers or miniature flags. For the purposes of this section, a “small artificial flower” shall mean any artificial flower the blossom or body of which does not exceed two and one quarter inches in any dimension.
Chapter 101: Section 16A. Sale of frozen desserts on or from motor vehicle; flashing lights required Section 16A. Any hawker or peddler who sells frozen desserts, as defined in section sixty-five G of chapter ninety-four, on or from a motor vehicle, shall equip such vehicle with a flashing amber dome light and front and rear warning lights which shall flash alternately and which shall be kept flashing when such vehicle is stopped for the purpose of selling frozen desserts.
Chapter 101: Section 17. Sale of certain articles without license Section 17. Hawkers and peddlers may sell without a license newspapers, religious publications, ice, flowering plants and such flowers, fruits, nuts and berries as may be wild or uncultivated. The aldermen or selectmen, may by regulations not inconsistent with this chapter, regulate the sale or barter and the carrying for sale or barter or exposing therefor by hawkers and peddlers of such articles without the payment of a fee may, in like manner require hawkers and peddlers, whether adults or minors, to be licensed except as otherwise provided and may promulgate regulations governing the same provided, however, that the license fee shall not exceed that prescribed by section 22. Such regulations may, in like manner, affix penalties for violations of such regulations not to exceed the sum of $20 for each such violation. A hawker and peddler licensed under this section shall not be required to be licensed under said section 22.
Chapter 101: Section 18. Sale without license Section 18. Articles other than those the sale of which is licensed, or permitted without a license, under the preceding section, and not prohibited by section sixteen, shall not be sold by hawkers or pedlers unless duly licensed as hereinafter provided.
Chapter 101: Section 18A. Food for sale for consumption by infants; drugs Section 18A. Food manufactured and packaged for sale for consumption by a child under the age of two years, or a drug as defined in section one of chapter ninety-four shall not be offered for sale or sold at a flea market, so-called.
Any person violating the provisions of this section shall be punished by a fine of not more than one hundred dollars for each item so offered for sale or sold.
Chapter 101: Section 19. Trade or sale of bootblacking by minors; permits Section 19. The aldermen or selectmen may make regulations consistent with the general laws relative to the exercise of the trade of bootblacking by minors, and to the sale or barter by minors of any goods, wares or merchandise the sale of which is permitted without a license by section seventeen, and may prohibit such trade or such sales, or may require a minor to obtain from them a permit therefor to be issued on terms and conditions prescribed in such regulations; provided, that in the case of girls under the age of eighteen years and of boys under the age of sixteen years the foregoing powers in cities shall be vested in and exercised by the school committee. No permit issued to a minor under this section nor badge issued to him under sections sixty-nine to seventy-three, inclusive, of chapter one hundred and forty-nine shall authorize the sale by a minor of any article, other than those which may be sold without a license under section seventeen, except that a badge so issued may authorize, in addition, the sale of magazines and other periodicals and song sheets, so called. A minor who sells such article or exercises such trade without a permit, if one is required, or who violates the conditions of his permit or any provision of said regulations, shall be punished by a fine of not more than ten dollars.
Section 2. The provisions of this chapter relative to transient vendors shall not apply to sales by commercial travelers or by selling agents to dealers in the usual course of business, or to bona fide sales of goods, wares or merchandise by sample for future delivery, or to sales of goods, wares or merchandise by any domestic corporation or agent thereof, by any person, whether principal or agent, who engages in temporary or transient business in any town in which taxes have been assessed upon his stock in trade during the current year, or to hawkers and pedlers as defined in section thirteen, nor shall they affect the right of any town to pass ordinances or by-laws authorized by law relative to transient vendors. No transient vendor shall be relieved or exempted from the provisions and requirements of this chapter relative to transient vendors by reason of associating himself temporarily with any local dealer, trader or merchant, or by conducting such temporary or transient business in connection with or as a part of the business of, or in the name of any local dealer, trader or merchant.
Chapter 101: Section 20. Permitting or aiding minor to violate Sec. 19 or 34 Section 20. No person, having a minor under his control, shall knowingly permit such minor to violate any provision of section nineteen or any provision of section thirty-four, nor shall any person procure or employ a minor to commit any such violation, nor shall any person, either for himself or as agent of any other person, furnish or sell to a minor any article the sale of which is permitted without a license by section seventeen, with knowledge that such minor would be selling such article in violation of section nineteen or in violation of section thirty-four, or after having received written notice to that effect from the school committee or any other officer charged with the enforcement of said section nineteen or said section thirty-four. Violation of this section shall be punished by a fine of not more than five hundred dollars or by imprisonment for not more than six months.
Chapter 101: Section 21. Employing or permitting minor to engage in hawking or peddling without permit or license Section 21. Whoever employs a minor in, or, having the care or custody of a minor, permits such minor to engage in, hawking or peddling without a permit or license, if one is required, or permits him to engage in selling door-to-door for future delivery without a certificate pursuant to section thirty-four, or for himself or as agent of any other person, furnishes or sells to a minor any article with knowledge that the minor would be selling such article in violation of the provisions of this chapter relative to hawkers and peddlers or in violation of the provisions of this chapter relative to those who sell door-to-door, shall be punished by a fine of not more than five hundred dollars, to be equally divided between the commonwealth and the town in which the offense was committed, or by imprisonment for not more than six months.
Chapter 101: Section 22. License; certificate of police chief; fees; special state licenses; rules and regulations Section 22. The deputy director may grant a license to go about carrying for sale or barter, exposing therefor and selling or bartering any goods, wares or merchandise, the sale of which is not prohibited by section 16, to a person who is or has declared an intention to become a citizen of the United States and who files with the deputy director a completely executed application to be furnished by the deputy director and on which shall be a certificate which shall be signed by the chief of police of the city or town in which the applicant resides which shall state that to the best of his knowledge and belief the applicant therein named is of good repute as to morals and integrity. The deputy director may grant, as aforesaid, special licenses upon payment by the applicant to the deputy director of a fee, as determined annually by the commissioner of administration under the provision of section 3B of chapter 7 and the licensee may go about carrying for sale or barter, exposing therefor and selling or bartering in any city or town any meats, butter, cheese, fish, fruits, vegetables or other goods, wares or merchandise, the sale of which is not prohibited by statute. A hawker or peddler licensed under this section shall not be required to be licensed under section 17. A hawker or peddler licensed under this section shall be subject to such local rules and regulations as may be made in a city by the mayor and city council and in a town by the board of selectmen.
Chapter 101: Section 22A. License for sale of prepared food; requisites Section 22A. No license shall be issued pursuant to section twenty-two to a person for the business of selling or exposing for sale from a mobile vending or peddling vehicle prepared food, meals or lunches intended to be consumed by the purchaser without further preparation or processing thereof by the purchaser, unless a certificate of registration as required by section three hundred and five C of chapter ninety-four has been issued for the premises or place of business at which such food, meals or lunches are prepared, handled or processed. The location of said premises or place of business and the fact that they have been so registered shall be endorsed upon the license issued under said section twenty-two.
Chapter 101: Section 23. Repealed, 1961, 293, Sec. 2 Chapter 101: Section 24. Special licenses to veterans and blind persons; authority to sell on public streets Section 24. The deputy director may grant without fee, on proof of identity, a special state license to act as hawker or peddler, subject otherwise to this chapter, to a World War I or II or Korean or Vietnam veteran, as defined in clause Forty-third of section seven of chapter four, who has a service-connected disability as recognized by the United States government; and to any blind person resident in the commonwealth and approved by the commissioner of the blind; provided, that no license under this section shall authorize the holder thereof to act as hawker or peddler on any public street or sidewalk in any city or town unless and until he shall have received written authority so to do from the chief of police or other official having charge of the police therein.
Chapter 101: Section 25. Repealed, 1970, 775 Chapter 101: Section 26. Record of licenses; inspection Section 26. The deputy director shall keep a record of all licenses to hawkers and peddlers granted by him, including the number of each such license and the name and residence of the licensee. All such records shall be open to public inspection. All such licenses shall bear the date of their issue and shall continue in force for one year from that date.
Chapter 101: Section 27. Endorsement, display, and production of license; penalties Section 27. Every person licensed as a hawker or pedler shall endorse his usual signature upon his license. The deputy director shall, at the expense of the licensee, provide a means for displaying such license which must be worn in a visible and conspicuous manner on his outer clothing with the license number, licensee’s name and the date of expiration exposed to view. Each licensee shall produce his license for inspection whenever demanded by the deputy director or by a mayor, alderman, selectman, inspector of standards, sealer or deputy sealer of weights and measures, city or town treasurer or clerk, constable, police officer or justice of the peace; and if he fails so to do, or fails to wear his license in a visible and conspicuous manner as heretofore prescribed, he shall be subject to the same penalty as if he had no license.
Chapter 101: Section 28. Effect of license on prosecution Section 28. No license issued to a hawker or pedler shall defeat or bar a prosecution against the licensee, if it is proved that he sold or bartered, carried for sale or barter or exposed therefor, any articles, except such as are permitted without a license by section seventeen, in a place in which he was not licensed to sell.
Chapter 101: Section 29. Sales by hawkers or pedlers licensed as auctioneers Section 29. No hawker or pedler, holding an auctioneer’s license, shall sell or expose for sale by public auction any goods, wares or merchandise in any town other than that from whose authorities such license was obtained, nor in any place in such town not expressly described therein.
Section 3. Every person before commencing business in the commonwealth as a transient vendor, whether as principal or agent, shall make written application, under oath, for a state license to the deputy director stating the names and residences of the owners or parties in whose interest said business is to be conducted, and shall make a special deposit of five hundred dollars with the deputy director or shall give a bond in the sum of five hundred dollars, payable to the deputy director and his successors, with sureties approved by the deputy director, conditioned upon (1) compliance with the provisions of this chapter relative to transient vendors, (2) payment of all fines or penalties incurred by him through violations of such provisions, and (3) payment or satisfaction of any judgment obtained against him in behalf of any creditor whose claim arises in connection with the business done under the licensee’s state license and who, before the expiration of sixty days from the return or surrender of said license or the filing of an affidavit of its loss, shall have given due notice of his claim to the deputy director. Thereupon, upon the payment of a fee, as determined annually by the commissioner of administration under the provision of section three B of chapter seven, the deputy director shall issue to him a state license authorizing him to do business as a transient vendor, subject to such local rules and regulations as may be made in a city by the mayor and city council and in a town by the selectmen. Such license shall expire one year from the date thereof or on the day of its surrender or of the filing of an affidavit of its loss, if it is earlier surrendered or if such affidavit is earlier filed. Such license shall contain a copy of the application therefor and of any statements required under section seven, and shall not be transferable. It shall not authorize more than one person to sell goods, wares or merchandise as a transient vendor either by agent or clerk or in any other way than in his own proper person, but a licensee may have the assistance of one or more persons in conducting his business who may aid him but not act for or without him.
Chapter 101: Section 30. Revocation of licenses Section 30. Any license granted by the deputy director under this chapter may be revoked by him upon conviction of the licensee of any crime which in the judgment of the deputy director warrants such revocation, or upon the submission to the deputy director of evidence satisfactory to him that, during the term of the license, the licensee has accepted or solicited money otherwise than through the bona fide sale or barter of goods, wares or merchandise or has violated any provision of section ten A of chapter two hundred and sixty-four, or has in any manner begged or solicited alms from the public, or for any other sufficient cause. Whenever any person is convicted of a violation of any provision of this chapter, or a person holding such a license is convicted of any crime, the clerk of the court in which, or the trial justice by whom, such person was convicted shall notify the deputy director.
Chapter 101: Section 31. Counterfeiting or forging licenses Section 31. Whoever counterfeits or forges a license, or a certificate of registration issued pursuant to section thirty-four, or has a counterfeited or forged license or certificate in his possession with intent to utter or use the same as true, knowing it to be false or counterfeit, or attempts to sell under a license or certificate which has expired or has been revoked or cancelled, or which has not been issued or transferred to him, or has in his possession another’s license or certificate with intent to use the same, shall be punished by a fine of not more than five hundred dollars or by imprisonment for not more than six months, or both such fine and imprisonment.
Chapter 101: Section 32. Arrest of hawkers, peddlers and door-to-door salespersons; prosecution Section 32. The deputy director, inspectors of standards and, within their respective jurisdictions, sealers or deputy sealers of weights and measures, constables and police officers shall arrest and prosecute every hawker and peddler, and transient vendor, who they may have reason to believe is violating any provision of this chapter. The chief of police, a police officer, or other official designated by a city council of a city or a board of selectmen of a town, may arrest and prosecute a person who engages in the sale of goods door-to-door for future delivery who such official has reason to believe is violating the provisions of section thirty-four.
Chapter 101: Section 33. Temporary licenses to sell articles for charitable purposes; fees Section 33. The selectmen in a town or in a city such board or officer as may be designated by ordinance may, under such conditions as they may deem proper, grant to any organization engaged exclusively in charitable work, or to a post of any incorporated organization of veterans who served in the military or naval service of the United States in time of war or insurrection, a special license authorizing it, upon a particular day and for a charitable purpose named in such license, to sell, through its accredited agents in the streets and other public places within such city or town, or in any designated part thereof, flags, badges, medals, buttons, flowers, souvenirs, and similar small articles; provided, that no person under sixteen years of age shall be accredited as such agent, that each agent shall wear in plain sight while engaged in selling such articles a badge, provided by such organization or post and approved by the authority issuing the license, bearing upon it the name of such organization or post and the date on which the license is to be exercised, and that no such agent shall be authorized to make or attempt to make such sales in front of any private premises against the objection of the owner or occupant thereof. The exercise of the licenses hereby provided for shall be subject to the provisions of all statutes, ordinances, by-laws, rules and regulations not inconsistent herewith. The fee for such a license shall be established in a town by town meeting action and in a city by city council action, and in a town with no town meeting by town council action, by adoption of appropriate by-laws and ordinances to set such fees, but in no event shall any such fee be greater than ten dollars.
Chapter 101: Section 34. Door-to-door sales for future delivery; employment of minors; duties of sales organization; registration Section 34. (a) As used in this section the following terms shall have the following meanings:—“Sales agent”, a person under eighteen years of age who is recruited or retained by, or who represents, or is in any manner associated with, whether as an employee or an independent contractor, any sales organization engaged in the sale of goods or periodicals door-to-door for future delivery for any commercial purpose in a city or town in the commonwealth. The term “sales agent” shall not include: (i) a person engaged in activities under the immediate supervision of a parent or guardian, or (ii) a person who does not earn his primary source of income while performing services for a sales organization, or (iii) a person who does not reside away from his home while engaged in the sales activity.
“Sales organization”, a person or representative thereof, engaged in the supervision, recruitment, retention, or employment of sales agents for the door-to-door sale of goods or periodicals for future delivery.
“Sales group”, any group of persons, including sales agents, which is engaged in the door-to-door sale of goods or periodicals for future delivery and which is under the supervision of a sales organization or sales supervisor.
“Sales supervisor”, a person representing a sales organization who directs or supervises a sales group in any city or town in which it is engaged in the sale of goods or periodicals door-to-door for future delivery.
(b) No sales organization shall recruit, hire, or employ a person to engage in the sale of goods or periodicals door-to-door for future delivery unless and until such person furnishes the sales organization with information sufficient to inform such sales organization of such person’s age and identification.
Each sales organization shall:(1) prior to the employment of a person under eighteen years of age, furnish to a parent or guardian of such person a listing of cities or towns in which the sales group will be working in the two weeks immediately following such employment, the dates when the sales group shall be in each such city or town, the address of the sales group in each such city or town during the time the sales group is in such city or town, and the business address at which such parent or guardian may be informed of such person’s work address.
(2) keep accurate accounts of sales made, lawful expenses incurred, and all amounts earned by each sales agent.
(3) provide to each sales agent for each pay period, but not less than once each seven days, an itemized written statement of the account of such sales agent.
(4) pay, on the same day each pay period to each sales agent, all money earned from all sales made a week or more prior thereto by such sales agent.
No sales organization, in carrying out any contract, agreement, or other arrangement with any sales agent, shall engage in any of the following conduct or activity:(1) threats or acts of reprisals, intimidation, or physical violence against any sales agent, or any person acting on behalf of any sales agent.
(2) refusal to disburse commissions, salary, compensation, or other remuneration owing to a sales agent.
(c) All sales agents and sales supervisors covered by the provisions of this section shall register with a chief of police or with another official to be designated by the city council of a city or the board of selectmen of a town of initial registration. Each applicant for registration shall provide positive identification, give a permanent street address, provide an exemplar of his signature, the name of his employer or the party responsible for complying with the provisions of subsection (b), the business address of such employer, the identity and registration of any motor vehicle to be used to transport goods or persons engaged in said business, and a brief description of the goods to be sold and proposed method of operation. Said chief of police or designated official shall photograph each applicant for the purpose of identification and shall retain a copy of each such photograph for a minimum of two years.
Each registrant shall pay to the city or town in which the initial registration occurs a registration fee in accordance with the provisions of section twenty-two.
If the chief of police or designated official determines by investigation or receives reliable information that an applicant has been convicted of a felony or is a fugitive from justice or if such applicant refuses to provide any of the required information, then said applicant may be denied registration. Otherwise, said chief of police or designated official shall provide each successful applicant who pays the required fee a certificate of registration which shall be effective and valid for two years from the date of issuance. Each such certificate of registration shall include the applicant’s photograph, the applicant’s description and signature, as well as the date and the name of the city or town of issuance. The certificate of registration shall be issued within forty-eight hours of the submission of the application. Such certificate shall be conspicuously displayed by each registered sales agent and sales supervisor when engaged in selling.
Before a sales agent or sales group may commence selling goods or periodicals door-to-door for future delivery in a city or town, written notice shall be given to the chief of police or other official designated by the city council of such city or the board of selectmen of such town. Such written notification shall include the name and local address of each sales agent and sales supervisor, the date and time in which the sale is to be conducted, a description of the goods or periodicals to be sold, and the proposed method of operation.
The chief of police or other designated official of a city or town shall electronically notify the criminal history systems board of the name of each sales agent, including a sales agent within a sales group, and each sales supervisor who has registered or provided notice that he is selling goods or periodicals door-to-door for future delivery in said city or town. Said notification shall be by means of the criminal justice information system in accordance with a plan to be developed by the criminal history systems board. The the chief of police shall make inquiry to determine whether a sales agent or sales supervisor is a missing person.
The chief of police or other designated official may regulate the hours during which and conditions under which the registrant may engage in door-to-door selling. If the sales group intends to extend its stay in any city or town, the sales supervisor, or sales organization if there is no sales supervisor, shall submit to the chief of police or other designated person a written statement citing the reason for such extension and the date of the expected departure of such sales group.
Any such registration may be revoked for good cause by the chief of police or other designated official in any city or town in which such sales are being made. Good cause shall include a violation of this section or a determination that the registrant has been convicted of a felony, or is a fugitive from justice, or has been charged with a felony while engaged as a sales agent or sales supervisor. In the event of any such revocation, the chief of police or other designated official shall immediately notify in writing the chief of police of the city or town which issued the certificate of registration so revoked.
(d) A person or sales organization that knowingly violates any provision of this section shall be subject to a fine of five hundred dollars or imprisonment for not more than six months.
A person who knowingly supplies false information on an application or who carries on the business regulated by this section without registering or after his registration is revoked or expired shall be punished by a fine of not more than five hundred dollars or by imprisonment for not more than six months.
(e) The provisions of this section shall not apply to any person who goes door-to-door to sell goods or periodicals on behalf of any group organized for any political purpose or for any purpose described in section four of chapter one hundred and eighty, nor shall this section apply to a person engaged in any sale governed by section sixty-nine of chapter one hundred and forty-nine.
Section 4. The deputy director shall keep on file all applications for such licenses and a record of all licenses issued thereon. All files and records of the deputy director and of the respective town clerks shall be in convenient form and open to public inspection.
Section 5. Every transient vendor, before making any sales of goods, wares or merchandise in a town, shall make application to the aldermen or selectmen or other board authorized to issue such licenses and, unless the fee therefor is fixed as hereinafter provided, shall file with them a true statement, under oath, of the average quantity and value of the stock of goods, wares and merchandise kept or intended to be kept or exposed by him for sale. Said board shall submit such statement to the assessors of the town, who, after such examination and inquiry as they deem necessary, shall determine such average quantity and value, and shall forthwith transmit a certificate thereof to said board. Thereupon the board shall authorize the town clerk, upon the payment by the applicant of a fee equal to the taxes assessable in said town under the last preceding tax levy therein upon an amount of property of the same valuation, to issue to him a license authorizing the sale of such goods, wares and merchandise within the town. The board may, however, authorize the issue of such license without the filing of said statement as aforesaid, upon the payment of a license fee fixed by it. Upon payment of such fee, said town clerk shall thereupon issue such license, which shall remain in force so long as the licensee shall continuously keep and expose for sale in such town such stock of goods, wares or merchandise, but not later than the first day of January following its date. Upon such payment and proof of payment of all other license fees, if any, chargeable upon local sales, such town clerk shall record the state license of such transient vendor in full, shall endorse thereon “local license fees paid” and shall affix thereto his official signature and the date of such endorsement.
Section 6. Any transient vendor who neglects or refuses to file the statement described in the preceding section, if required by the aldermen, selectmen or other like board, or makes a false or fraudulent representation therein, shall be punished by a fine of not less than five nor more than twenty dollars for each day on which he keeps or exposes for sale any goods, wares or merchandise.
Section 6A. Every application under sections three to five, inclusive, for a transient vendor’s license shall contain an irrevocable power of attorney, in such form as the deputy director may prescribe, constituting and appointing, in case the license applied for is issued, the deputy director, or his successors in office, the true and lawful attorney of the applicant upon whom may be served all lawful process in any action or proceeding against him growing out of the transaction of business by him within this commonwealth under the license, and containing an agreement that any process against him which is so served shall, if he is notified of such service as hereinafter provided, be of the same legal force and validity as if served on him personally and that the mailing by the deputy director of a copy of such process to him at his last address as appearing on the deputy director’s records shall be sufficient notice to him of such service. Service of such process shall be made by leaving duplicate copies thereof with a fee, as determined annually by the commissioner of administration under the provision of section three B of chapter seven, in the hands of the deputy director, or in his office, and the deputy director shall forthwith send one of said copies by mail, postage prepaid; addressed to the defendant at his last address as appearing on the deputy director’s records; and an affidavit of the deputy director, or of any person authorized by him to send such copy, that such copy has been so mailed shall be prima facie evidence thereof. One of the duplicates of such process, certified by the deputy director as having been served upon him, shall be sufficient evidence of service upon him under said power of attorney. The court in which the action is pending may order such continuances as may be necessary to afford the defendant reasonable opportunity to defend the action.
Section 7. No transient vendor shall advertise, represent or hold forth any sale as an insurance, bankrupt, insolvent, assignee’s, trustee’s, executor’s, administrator’s, receiver’s, wholesale, manufacturers’ wholesale or closing out sale, or as a sale of any goods damaged by smoke, fire, water or otherwise or in any similar form, without first making a sworn statement to the deputy director, either in the original application for a state license or in a supplementary application, of all the facts relating to the reasons for and character of such special sale so advertised or represented, and of the names of the persons from whom the goods, wares or merchandise were obtained, the date of delivery to the person applying for or holding the license, the place from which said goods, wares or merchandise were last taken, and all details necessary to exactly locate and fully identify all such goods, wares or merchandise.
Section 8. No transient vendor shall sell or expose for sale, at public or private sale, any goods, wares or merchandise without state and local licenses therefor, properly endorsed, nor shall any person, either principal or agent, advertise by circular, handbill, newspaper or in any other manner any such unlicensed sales. No transient vendor shall file any application, original or supplementary, containing any false statement.
Section 9. Violations of section seven or eight shall be punished by a fine of not more than fifty dollars or by imprisonment for not more than two months, or both.
Chapter 102: Section 1. Boarding vessels without leave or authority Section 1. Whoever, not being a pilot or public officer, shall board or attempt to board a vessel arriving in the harbor of Boston, Salem, Fall River, New Bedford and Fairhaven or Gloucester, before such vessel has been made fast to the wharf, without the previous permission of the master or person having charge thereof or the previous written permission of its owners or agent, or whoever, without such leave and without authority of law, shall board a vessel in any of said harbors after having been forbidden so to do by a person having charge thereof at the time, or, having boarded such vessel, shall refuse or neglect to leave it when ordered so to do by the person having charge of it, shall forfeit not more than fifty dollars.
Chapter 102: Section 10. Regulations on board during weighing Section 10. Every person on board such vessel, who does not keep within the bounds of the bulkhead and fore chains during the time of taking the marks or while a weigher is employed in weighing or marking, unless in case of absolute necessity, shall forfeit not more than twenty dollars.
Chapter 102: Section 11. Annual examination of marks; certification Section 11. Such vessels shall have their marks examined annually in June by a sworn weigher; and if the marks agree with the former certificates, he shall certify the same accordingly; otherwise he shall keep such certificates, which shall be admitted in evidence in any prosecution against the master or owner of such vessel under this chapter, and such vessel shall be weighed again. For the services required by this section he shall receive one dollar and fifty cents.
Chapter 102: Section 12. Fees of weighers Section 12. Each weigher shall receive from the owner or master of a vessel weighed and marked twenty cents for every ton of such vessel, and four dollars for furnishing marks, nails and other necessary articles, fastening the same and giving the certificate.
Chapter 102: Section 13. Penalties Section 13. Every owner or master of any such vessel who neglects to have the same weighed, marked and examined according to this chapter, or removes any marks or alters his certificate, and every weigher who places any mark contrary to this chapter, or gives a false certificate, shall forfeit not more than three hundred dollars.
Chapter 102: Section 14. Ordinances or by-laws regulating marking or weighing of lighters and other vessels Section 14. Towns may establish ordinances or by-laws regulating the marking and weighing of lighters and other vessels employed in transporting stones, gravel, sand or other ballast; the inspection and weighing of such ballast; and the appointment and compensation of weighers, markers, inspectors and other officers necessary to carry such ordinances or by-laws into effect; and may affix penalties for breaches thereof not exceeding those named in sections ten and thirteen.
Chapter 102: Section 15 to 16. Repealed, 1960, 275, Sec. 3 Chapter 102: Section 17. Illegal deposit of substances or things injuring or obstructing navigation Section 17. Whoever wilfully and without lawful authority or license therefor, deposits in a harbor or other navigable tide waters stones, gravel, mud, ballast, cinders, ashes, dirt or any other substance, tending to injure the navigation or to shoal the depth thereof, or throws or drops into such waters any barrel, box, log, timber or other object, tending to obstruct the navigation thereof, shall be punished by a fine of not less than twenty nor more than one hundred dollars.
Chapter 102: Section 18. Passing warp or line across channel or dock Section 18. No warp or line shall be passed across a channel or dock so as to obstruct vessels passing along the same.
Chapter 102: Section 19. Harbor masters; assistant harbor masters; appointment Section 19. The mayor of a city, except Boston, or the selectmen of a town where a harbor is situated, unless otherwise specially provided, may, and for all harbors that have been improved by the expenditure of money by the commonwealth shall, appoint a harbor master and assistant harbor masters and fix their compensation, to be paid by their respective cities or towns. Said appointment shall remain in force unless the harbor master is removed for neglect of duty, negligence or conduct unbecoming a harbor master. Assistant harbor masters shall be appointed for terms of three years. Any appointment or re-appointment of assistant harbor masters shall be on the recommendation of the harbor master.
Chapter 102: Section 1A. Boarding vessels without permission; penalty; exceptions Section 1A. Except as provided in section one, whoever, not being a pilot or public officer, boards a boat or vessel without the permission of the owner or person in charge thereof shall be punished by a fine of not more than fifty dollars.
This section shall not apply to a person who boards a rafted-up boat or vessel to reach a boat or vessel which he is authorized to board, or to reach a wharf, dock or float, or who boards a boat or vessel which has been abandoned, or who boards a boat or vessel to save life or prevent personal injury or property damage.
Chapter 102: Section 2. Exemption of seamen or mariners from arrest on debt; liens Section 2. A seaman or mariner who has shipped or entered into a contract for a voyage from a port in this commonwealth shall not be arrested on mesne process on account of a debt to a landlord or boarding house keeper; nor shall a landlord or boarding house keeper detain or have a lien upon his wearing apparel or other property, or hinder, obstruct or delay him in the performance of such contract. Violation of this section shall be punished by a fine of not more than two hundred dollars.
Chapter 102: Section 20. Powers and duties of assistants Section 20. Such assistants shall be subject to the direction and control of the harbor master of their town, and shall have all the powers given to, and be subject to all the duties required of, harbor masters by law.
Chapter 102: Section 21. Powers of harbor masters Section 21. The master of a vessel within a harbor for which a harbor master is appointed shall anchor his vessel according to the regulations of the harbor master, and shall move to such place as he directs. The master of a towboat having a vessel in tow and a pilot having a vessel in charge shall allow such vessel to anchor only in such place as the regulations of the harbor master provide for anchorage.
Chapter 102: Section 22. Permit to unload lumber in stream or channel Section 22. The master of a vessel, before unloading lumber in the stream or channel of a harbor having a harbor master, shall obtain from him a permit, designating where such lumber may be rafted.
Chapter 102: Section 23. Order to vessel to brace topsail yards, etc. Section 23. A vessel lying in a harbor or at a wharf or pier in a harbor shall, if so directed by the harbor master, cockbill the lower yards, brace the topsail yards fore and aft and rig in the jib-boom.
Chapter 102: Section 24. Removal of vessel lying in harbor Section 24. A harbor master may, at the expense of the master or owners thereof, cause the removal of any vessel which lies in his harbor and is not moved when directed by him, and upon the neglect or refusal of such master or owners on demand to pay such expense, he may recover the same from them in contract, to the use of the town where the harbor is situated.
Chapter 102: Section 25. Removal of vessel lying at wharf Section 25. If the master or other person in charge of a vessel occupying a berth at a public wharf or pier fails, after notice from the wharfinger thereof or his agent, to remove his vessel from such berth within such time as the harbor master adjudges reasonable, or if the master or other person in charge of such vessel has absented himself from the area of the berth for a period of time exceeding three times the posted limit, and cannot be contacted for the purpose of giving him notice to remove his vessel from such berth, the harbor master may cause such vessel to be removed to some other berth or anchored in the stream, and the city or town wherein the public wharf, pier or float is located, may recover the costs of such removal in an action of contract from the owner, agent or master of said vessel, said costs not to exceed fifty dollars.
Chapter 102: Section 26. Stationing of vessels Section 26. A harbor master may regulate and station all vessels in the streams or channels of his harbor, and may remove such as he determines are not fairly and actually employed in receiving or discharging their cargoes, to make room for such others as require to be more immediately accommodated for such purposes.
Chapter 102: Section 27. Report of violations Section 27. Harbor masters shall report to the department of environmental management any violation of section seventeen or of any law relating to tide water in their respective harbors, and of all shipwrecks in the tide waters of their respective harbors and of any obstructions therein.
Chapter 102: Section 28. Penalties Section 28. Whoever violates any of the provisions of the ten preceding sections or refuses or neglects to obey the lawful orders of a harbor master, or resists him in the execution of his duties, shall be punished by a fine of not more than fifty dollars, and shall be liable in tort to any person suffering damage thereby.
Chapter 102: Section 3. Jurisdiction of courts; recovery of penalties Section 3. If any offence mentioned in sections one and two is committed in Boston or Boston harbor, the penalty may be recovered by complaint in the municipal court of the city of Boston; if in Salem or Salem harbor, in the first district court of Essex; if in Fall River or Fall River harbor, in the second district court of Bristol; if in New Bedford or Fairhaven or in the harbor of New Bedford and Fairhaven, in the third district court of Bristol, and if in Gloucester or Gloucester harbor, in the district court of eastern Essex. Whoever commits any such offence may be arrested without a warrant by any officer qualified to serve criminal process in the town in which the offence may be tried, and he shall be forthwith brought before the court.
Chapter 102: Section 4. Harbor limits Section 4. For the purposes of sections one, two and three, the outer limits of Boston harbor shall be a line drawn from Harding’s Rock to the Outer Graves and thence to Nahant Head, and said harbor shall include the shores of Chelsea; the outer limits of Salem harbor shall be the chops of said harbor; the harbor of Fall River shall include the waters of Taunton Great river and Mount Hope bay, from the south line of the town of Freetown to the Rhode Island state line, including the shores of Somerset; the harbors of New Bedford and Fairhaven shall be considered one harbor, the outer limits of which shall be the outer limits of Buzzard’s bay; and the other limits of Gloucester harbor shall be a line drawn from Eastern Point to Norman’s Woe.
Chapter 102: Section 5. Repealed, 1974, 260, Sec. 3 Chapter 102: Section 6. Weighers of lighters or other vessels transporting stone; appointment Section 6. The mayor of a city and the selectmen of a town in which lighters or other vessels are employed in transporting stones, gravel or sand shall annually, in March or April, appoint one or more sworn weighers of vessels.
Chapter 102: Section 7. Marking of vessels transporting stone; specifications Section 7. Every lighter or other vessel employed in transporting stone sold by weight or gravel or sand shall be marked on the stem and stern post, nearly level with the bend of the vessel, with stationary marks or bar iron, not less than six inches long and two and a half inches wide, fastened with two good and sufficient iron bolts driven through said stem and stern post and riveted into said bar iron, from which all other marks shall take their distance in feet, inches and parts of inches, as the distance may require, from the lower edge of the stationary marks to the lower edge of the other marks; which marks shall be as follows: light water marks, not less than four inches long and one inch and a half wide; and marks for every four tons above said light water marks, legibly cut or cast, in figures of four and multiples of four, up to the full capacity of the vessel. Said figures shall express the weight which such vessel is capable of carrying when the lower parts of such figures touch the water; and all the marks shall be of good and sufficient lead or copper, fastened on the stem and stern post of each vessel with sufficient nails not less than one inch long; or the weight which such lighter or other vessel is capable of carrying shall be indicated by having in the hold of such lighter or vessel, at each end thereof, and as near as practicable to the extremities of the space where the cargo is usually carried, a glass tube, with a stopcock at the bottom, which shall be mounted upright upon a scaleboard of metal or wood having marks or figures so arranged thereon as to indicate the weight of the cargo when the water in the tube shall reach the bottom of a figure or mark on the scaleboard.
Chapter 102: Section 8. Duties of weighers Section 8. Each weigher, upon request, shall furnish the requisite marks and nails, and shall cause lighters and other vessels to be weighed and marked in conformity with the preceding section. The weigher shall keep in a book provided for the purpose a correct account of the distance of each mark from the stationary marks, in feet, inches and fractions thereof, and shall give a certificate thereof, expressing the distance, to the master of every such vessel.
Chapter 102: Section 9. Tonnage of vessel; deduction Section 9. In taking the tonnage of every such vessel, a deduction may be made of one ton for every inch that the light water marks are under water after such vessel has discharged its cargo.
Section 1. For the purposes of this chapter the shore line of the commonwealth shall be divided into four districts.
District one shall be the harbor of Boston and shall include all places or landings accessible to vessels from the sea within the limits of Egg Rock, now or formerly known as Nahant Rock or Nahant Head, on the north, and Point Allerton on the south.
District two shall include all landing places accessible to vessels from the sea situated between the New Hampshire state line on the north and Egg Rock on the south, including rivers, bays and sounds adjacent thereto.
District three shall include all landing places accessible to vessels from the sea situated between Point Allerton on the north and the Rhode Island state line on the west, with all such landing places on the Elizabeth Islands and in the counties of Nantucket and Dukes, including rivers, bays and sounds adjacent thereto, and the Cape Cod canal.
District four shall include all landing places on Mount Hope bay and the Taunton river situated within the commonwealth.
Section 15. A surety upon the bond of a pilot desiring to be discharged from liability thereon shall give notice thereof to the commissioners, and shall also give written notice to such pilot, which may be served by a constable, and shall, with the return of the constable thereon, be filed with the state treasurer, and at the expiration of thirty days therefrom, the liability of such surety for the subsequent acts of said pilot shall cease. If a pilot so notified fails to furnish a new bond before the expiration of said thirty days, his commission shall be void.
Section 16. A pilot, in case of the decease, insolvency or bankruptcy of a surety upon his bond, shall give notice thereof to the commissioners. In such a case, or whenever a pilot’s bond appears to the commissioners to be insufficient, he shall give a new bond.
Section 17. A pilot shall have a lien for his pilotage fees upon the hull and appurtenances of every vessel liable to him therefor under this chapter for sixty days after the completion of his services; but the lien shall not be enforced until approved by the commissioners.
Section 18. A pilot shall be liable for all damages accruing from his negligence, unskillfulness or unfaithfulness.
Section 19. A pilot shall, if so required, exhibit his commission to the master of any vessel of which he may take charge.
Section 1A. As used in this chapter the following words shall, unless the context clearly requires otherwise, have the following meaning:“Area of special interest”, any water of the commonwealth that is found by the secretary of environmental affairs to contain 1 or more immobile obstacles to navigation, abut or include areas of critical environmental concern, are designated as an estuary of national significance, abut or include habitat for endangered species, abut or include public recreation areas, support shell fishing, fin fishing or tourist industries, or abut or include sensitive public safety areas. Such waters include but are not limited to Buzzards Bay, Vineyard Sound, Mount Hope Bay.
Section 2. There shall be two commissioners of pilots for district one and one deputy commissioner of pilots for each of the other three districts. On or before December first in any year when their terms of office expire, their successors shall be appointed by the governor, with the advice and consent of the council, for terms of three years. A deputy commissioner of pilots for any district shall be a resident of a town having a landing place accessible to vessels from the sea situated within that district. In this chapter, the word “commissioners” shall be held to mean, as to district one, the commissioners of pilots for said district and, as to each other district mentioned in section one, the deputy commissioner of pilots for such district. They shall have experience in maritime and nautical affairs. Appointments of commissioners for district one shall be made upon the recommendation of the trustees of the Boston Marine Society provided such recommendation is made. Appointments of commissioners for districts other than district one may be made upon the recommendation of said trustees. No commissioner for any district shall be such a trustee.
Section 20. A pilot taking charge of a vessel drawing more water than his commission authorizes shall be suspended or removed.
Section 21. Every foreign vessel of three hundred and fifty gross tons or over, every other United States vessel that is carrying oil, hazardous material, or hazardous waste in bulk as cargo in or entering upon areas of special interest within the waters of the commonwealth, every United States vessel under register of three hundred and fifty gross tons or over, and every other vessel not exempted by section twenty-eight or the laws of the United States, entering, departing in transit or shifting within the confines of any district of the commonwealth shall take and employ a pilot commissioned under this chapter, and shall be subject to the provisions of this chapter. Said vessel, its master, owner, agent or consignee shall be liable for and pay pilotage rates in accordance with the pilotage laws established under the provisions of this chapter. Said vessels shall be subject to regulations established by the pilot commissioners.
Any persons duly licensed by the United States Coast Guard as mate or master of a United States steam or motor vessel, of unlimited gross tons upon oceans, with a United States Coast Guard first class pilot endorsement for the waters of Cape Cod Bay, Cape Cod Canal, Buzzards Bay, Nantucket Sound or Vineyard Sound, may apply to the district 3 commissioner of pilots for a transit commission to navigate in those waters. A person so applying shall present proof of 15 round trips as a pilot or as a pilot under instruction or equivalent transits over those waters within the past 3 years before the date of application, as well as any federal course certifications as may be required.
Section 28. All coastwise vessels not sailing under register and not carrying oil, hazardous material or hazardous waste in bulk as cargo in or entering upon areas of special interest within the waters of the commonwealth, United States public vessels, and United States fishing vessels shall be exempt from compulsory pilotage; provided, however, that if any such vessel requests the aid of a pilot, he shall, when permitted by the laws of the United States, serve the same in like manner as vessels not exempt, and shall be entitled to regular compensation.
Section 3. The commissioners, subject to the approval of the trustees of said society, shall formulate rules and regulations for pilotage and establish rates within their respective districts, which, for district one shall be the rates established in section thirty-one, and which for the other three districts shall not exceed the rates established by said section. The commissioners also, in accordance with such rules and regulations, shall grant commissions as pilots for their districts or for special locations therein, to such persons as they consider competent; provided that for district one such persons shall first be approved by said trustees. The commissioners may, upon satisfactory evidence of his misconduct, carelessness or neglect of duty, suspend any such pilot until the next meeting of said trustees and may thereafter continue such suspension until the close of the next stated meeting of said trustees, but no longer for the same offense. If said trustees decide at either of said meetings that the commission of such pilot ought to be revoked, the commissioners may revoke it at any time after said decision is rendered and before it is reversed. The commissioners shall cause the laws and regulations for pilotage within their district to be duly observed and executed, and shall receive, hear and determine complaints by and against pilots for said district.
Section 31. Rates of pilotage outward and inward for the port of Boston, calculated per foot of draught, shall be as follows: for vessels 3,500 gross tons or under $45.
00 for vessels over 3,500 to 7,000 gross tons $58.
70 for vessels over 7,000 to 15,000 gross tons $66.
75 for vessels over 15,000 to 25,000 gross tons $69.
90 for vessels over 25,000 to 35,000 gross tons $71.
45 for vessels over 35,000 to 45,000 gross tons $73.
45 for vessels over 45,000 gross tons $78.
90The following charges shall be made for anchoring vessels:(1) an inbound vessel subject to pilotage that anchors in an area outside Deer Island Light and inside the demarcation line for Federal Inland Waters for more than six hours shall pay $300;(2) an inbound vessel from sea subject to pilotage that anchors in anchorage number one, two or five shall pay full pilotage;(3) an outbound vessel subject to pilotage that anchors in anchorage number one, two or five and the pilot remains on board shall be subject to detention fees and shifting charges.
The following charges shall be made for shifting vessels:(1) between docks in Boston, $400;(2) between a dock in Boston and anchorage number one, $400;(3) between a dock in Boston and anchorage number two, one-half pilotage;(4) between anchorage number five and Quincy, full pilotage;(5) between anchorage number five and Boston, full pilotage;(6) between Boston or anchorage number two and Quincy, full pilotage from Boston, full pilotage into Quincy;(7) between anchorage number two and Boston from one to six hours, $400;(8) between anchorage number two and Boston in excess of six hours, one-half full pilotage;(9) between sea and Quincy, full pilotage, but if a vessel proceeds to anchorage number two at the request of the master or agent, an additional one and one-half full pilotage; and(10) shifting a ship in anchorage number two, $400.
Other charges shall be:(1) for detention of a pilot on board a vessel, there shall be a one hour free period, followed by a $100 charge for the second hour or portion thereof; for each additional hour or portion thereof there shall be a charge of $100. Detention time shall begin at the ordered sailing time;(2) cancellation rate, $400;(3) compass adjusting, $400;(4) calibration rate, $400;(5) when a pilot is ordered and dispatched for an arriving vessel and his services are not employed, the vessel shall pay a charge of $400, but a pilot shall be considered ordered unless notified: 3 hours before sailing time in Boston; 3 hours before sailing time in Quincy, anchorage number two or anchorage number five;(6) no charge shall be made for a vessel detained because of fog or stress of weather;(7) pilot carried away, the vessel shall pay his return expenses plus $200 per day;(8) notifying a vessel of his diversion orders, a charge of $100 may be levied plus any regular charges;(9) assisting the master in docking and undocking, $350;(10) all inbound vessels shall notify the pilot office eight hours before arrival time if such time varies more than two hours from their latest estimated time of arrival report; and(11) a surcharge shall be made on each full pilotage charge for the cost of a suitable replacement vessel for the Boston Pilot when it is deemed advisable by a condition survey of the vessel. The surcharge shall be $50 per full pilotage for all vessels 3,500 gross tons and under and $100 per full pilotage for all vessels over 3,500 gross tons. Any such surcharge funds collected shall be placed in an escrow fund which shall be overseen by the office of the commissioners of pilots and shall be used in addition to proceeds realized from the sale of a present pilot vessel. An audited statement of the fund shall be made available to industry representatives on a quarterly basis.
Section 33. A pilot failing to anchor a vessel carrying alien passengers or a vessel subject to quarantine at the place assigned by the proper authorities shall be suspended or removed.
Section 34. All controversies between pilots relative to their mutual rights, privileges and duties shall be referred to and settled by three master pilots, to be chosen by the parties for the purpose.
Section 35. No person unless he holds a commission as a pilot shall, if a commissioned pilot offers his services or can be obtained within a reasonable time, assume or continue to act as pilot in the charge or conduct of any vessel within the waters of this commonwealth, unless he is actually employed on such vessel for the voyage. Whoever violates the provisions of this section shall be punished by a fine of not less than five thousand nor more than ten thousand dollars.
Section 4. The commissioners of district one shall appoint a secretary who shall keep an office and attend the same during the day to receive complaints by and against the pilots for said district, and who shall keep a fair record of his doings which shall be open at all times for examination.
Section 5. Once in every three months each pilot shall render to the commissioners for his district an accurate account of all vessels piloted by him and of all money received for pilotage by him or by any person for him, and shall pay to the said commissioners four per cent of the amount thereof, except in district one, wherein each pilot or any person for him, shall pay to said commissioners two per cent of the amount thereof, and if he makes a false return of money received he shall pay to them not more than fifty dollars. The trustees of the Boston Marine Society shall fix the compensation of the commissioners and their allowance for office rent, clerk hire and incidental expenses, which shall be paid out of the amounts so paid to the commissioners, and the surplus, if any, shall be paid to said society.
Section 6. No person shall receive a commission or exercise the office of pilot until he has given to the state treasurer a bond with two sureties, approved by the commissioners, or a surety bond of a surety company authorized to transact business in the commonwealth, in the penal sum of one thousand dollars, conditioned on the faithful performance of the duties of his office and the payment of all damages accruing from his negligence, unskillfulness or unfaithfulness.
Section 1. A factor or other agent intrusted with the possession of merchandise or of a bill of lading consigning merchandise to him with authority to sell the same shall be deemed the true owner of such merchandise, so far as to give validity to any bona fide contract of sale made by him.
Section 2. A shipper in lawful possession of merchandise at the time of shipment and in whose name it is shipped for sale shall be deemed the true owner thereof so far as to entitle the consignee to a lien thereon for money advanced or for securities given to the shipper for or on account of such consignment, unless the consignee, at or before the time when he made the advances or gave the securities, had notice by the bill of lading or otherwise that the shipper was not the actual and bona fide owner.
Section 3. If a person intrusted with merchandise has authority to sell or consign the same, a consignee to whom he consigns it shall have a lien thereon for any money or merchandise advanced or for any negotiable security given by him on the faith of such consignment, to or for the use of the person in whose name the consignment or delivery was made, and for any money, negotiable security or merchandise received for the use of such consignee by the person in whose name the consignment or delivery was made, if such consignee had, at the time of such advance or receipt, probable cause to believe that the person in whose name the merchandise was shipped, transmitted or delivered was the actual owner thereof or had a legal interest therein to the amount of said lien.
Section 4. If a consignee or factor, having possession of merchandise, or a bill of lading, permit, certificate or order for the delivery thereof, with authority to sell said merchandise, deposits or pledges such merchandise or a part thereof or such document with any other person as security for money or merchandise advanced or for a negotiable instrument given by him on the credit thereof, such other person, if he makes such loan, advance or exchange in good faith and with probable cause to believe that the agent making the deposit or pledge had authority so to do and was not acting fraudulently against the owner of such merchandise, shall, notwithstanding he has notice of such agency, acquire the same interest in and authority over such merchandise and documents as he would have acquired if the agent had been the actual owner thereof. In the event of conflict between the provisions of this section and provisions of article nine of chapter one hundred and six, the provisions of said article nine govern.
Section 5. If such merchandise or document is accepted in deposit or pledge for an antecedent debt due from such consignee or factor, the person receiving the same shall thereby acquire no other or further right or interest in or authority over or lien upon the same than the consignee or factor might have enforced against the actual owner.
Section 6. The three preceding sections shall not affect the lien of a consignee or factor for expenses and charges attending the shipment, transportation and care of merchandise intrusted to him; nor prevent the actual owner of merchandise from recovering it, previous to any pledge thereof, from the consignee or factor or from his assignee in case of his insolvency; nor prevent such owner from recovering any merchandise or document so deposited or pledged, on tender of the money and restoration of the negotiable security or property so advanced to such consignee or factor, and on tender of such further amount of money and restoration of such negotiable instrument or property advanced or given by the consignee or factor to the owner, or upon tender of an amount of money equal to the amount or value of such merchandise; nor prevent him from recovering from a person with whom such merchandise has been so deposited or pledged any balance of money remaining in his hands as the proceeds of the sales thereof, after deducting the amount or value of the money or negotiable security so advanced thereon.
Section 7. The following terms as used in sections eight and nine, unless the context otherwise requires, shall have the following meanings:“Commission”, compensation accruing to a sales representative for payment by a principal, earned through the last day on which services were performed by the sales representative, the rate of which is expressed as a percentage of the dollar amount of orders or sales.
“Principal”, a person who manufactures, produces, imports or distributes a product for wholesale; contracts to solicit orders for such product, and compensates individuals who solicit wholesale orders in whole or in part, by commission.
“Sales representative”, a person other than an employee, who contracts with a principal to solicit wholesale orders in the commonwealth and who is compensated, in whole or in part, by commission but shall not include one who places orders or purchases exclusively for his own account for resale.
“Day”, any calendar day, including Saturdays, Sundays and legal holidays.
“Termination”, the end of services performed by the sales representative for the principal whether by expiration of a contract, discharge or resignation.
Section 8. The terms of the contract between a principal and a sales representative shall determine when a commission shall be due. If the time when such commission shall be due is not specified in a contract, the past practices between the parties shall control or, if there are no such past practices, the custom and usage prevalent in the commonwealth for the business that is the subject of the relationship between the parties shall control. All commissions that are due at the time of termination of a contract between a sales representative and principal shall be paid within fourteen days after the date of termination. Commissions that become due after the termination date shall be paid within fourteen days after the date on which the commissions became due.
Section 9. A principal who wilfully or knowingly fails to comply with provisions relating to the prompt payment of commissions set forth in section eight shall be liable to the sales representative in a civil action for the principal amount of the commissions owed and for an additional sum up to three times the amount of commissions and for reasonable attorney’s fees and court costs. A principal who is not a resident of the commonwealth and who enters into a contract subject to the provisions of sections seven to nine shall be deemed to be doing business in the commonwealth for purposes of the exercise of personal jurisdiction over such principal. No provision of sections seven to nine may be waived, whether by express waiver or by an attempt to make a contract or agreement subject to the laws of another jurisdiction. A waiver of any provision of sections seven to nine shall be void.
Section 1. As used in this chapter, the following words shall, unless the context clearly requires otherwise, have the following meanings:“Artist”, the person who creates a work of fine art or, if such person is deceased, such person’s heir, legatee, or personal representative.
“Fine art”, a painting, sculpture, drawing, work of graphic art, including an etching, lithograph, offset print, silk screen, or work of graphic art of like nature, a work of calligraphy, or a work in mixed media including a collage, assemblage, or any combination of the foregoing art media.
“Art dealer”, a person engaged in the business of selling works of fine art, other than a person exclusively engaged in the business of selling goods at public auction.
“Person”, an individual partnership, corporation, association or other group, however organized.
“Consignment”, a delivery of a work of fine art under which no title to, estate in, or right to possession of, fine art, superior to that of the consignor shall vest in the consignee, notwithstanding the consignee’s power or authority to transfer and convey to a third person all of the right, title and interest of the consignor in and to such fine art.
Section 2. Notwithstanding any custom, practice or usage of the trade to the contrary, whenever an artist delivers or causes to be delivered a work of fine art of the artist’s own creation to an art dealer in the commonwealth for the purpose of exhibition or sale, or both, on a commission, fee or other basis of compensation, the delivery to and acceptance of such work of fine art by the art dealer shall constitute a consignment, unless the delivery to the art dealer is pursuant to an outright sale for which the artist receives or has received full compensation for the work of fine art upon delivery.
Section 3. The following provisions shall apply to consignment of a work of fine art:(a) The art dealer, after delivery of the work of fine art, shall constitute an agent of the artist for the purpose of sale or exhibition of the consigned work of fine art.
(b) The work of fine art shall constitute property held in trust by the consignee for the benefit of the consignor, and shall not be subject to claim by a creditor of the consignee.
(c) The consignee shall be responsible for the loss of, or damage to, the work of fine art.
(d) The proceeds from the sale of the work of fine art shall constitute funds held in trust by the consignee for the benefit of the consignor. Such proceeds shall first be applied to pay any balance due the consignor, unless the consignor expressly agrees otherwise in writing.
Section 4. A work of fine art received as a consignment shall remain trust property, notwithstanding the subsequent purchase thereof by the consignee directly or indirectly for the consignee’s own account until the price is paid in full to the consignor. If such work is thereafter resold to a bona fide purchaser before the consignor has been paid in full, the proceeds of the resale received by the consignee shall constitute funds held in trust for the benefit of the consignor to the extent necessary to pay any balance still due to the consignor and such trusteeship shall continue until the fiduciary obligation of the consignee with respect to such transaction is discharged in full.
Section 5. Any provision of a contract or agreement whereby the consignor waives any provision of this chapter is void.
Section 6. The provisions of this chapter shall not apply to a written contract executed prior to its effective date, unless either the parties agree by mutual consent that the provisions of this chapter shall apply or such contract is extended or renewed after the effective date of this chapter. The provisions of this chapter shall prevail over any conflicting or inconsistent provisions of chapter one hundred and four and chapter one hundred and six.
Section 1. The commissioner of public safety or his designee, in this chapter hereinafter called the commissioner, may license suitable persons, or corporations established under the laws of and having their places of business within the commonwealth, to be public warehousemen, upon the payment of a license fee as determined annually by the commissioner of administration under the provision of section three B of chapter seven. Such license shall not be issued unless and until the applicant, at his own expense, shall have given notice of said application by publishing the same in two consecutive publications of a newspaper published in the town in which the warehouse is to be located. Such notice shall set forth the name of the applicant in full, a description of the premises on which the license is sought to be exercised, designating the building or part of the building to be used and the street and number, if any. Such warehousemen may keep and maintain public warehouses for the storage of goods, wares and merchandise. They shall give bond to the state treasurer for the faithful performance of their duties in an amount and with sureties approved by the commissioner, and may appoint one or more deputies, for whose acts they shall be responsible. A railroad corporation licensed as a public warehouseman shall not be required as such to receive any property except such as has been or is forthwith to be transported over its road or to give sureties on its bond.
The following words as used in this chapter shall have the following meaning:—“Public warehouse”, any building, or part thereof, kept and maintained for the storage of goods, wares and merchandise as a business. “Warehouseman” or “public warehouseman”, a person, corporation, partnership, association or trustees engaged in the business of storing goods for hire.
Section 2. Whoever keeps and maintains a public warehouse for the storage of goods, wares and merchandise without procuring a license and giving a bond, as provided in the preceding section, shall be punished by a fine of not more than one thousand dollars, and may be enjoined by the supreme judicial court from maintaining such a public warehouse, upon an information in equity brought by the attorney general at the relation of any person.
Section 2A. A surety upon a bond given by a public warehouseman as a condition of holding a license issued pursuant to section one, who desires to be discharged from liability thereunder shall give written notice to that effect to the commissioner and to the state treasurer, in such form as the commissioner may prescribe, specifying a date, not earlier than sixty days after the giving of such notice, upon which his liability is to terminate in respect to further deposits for storage with such warehouseman. The commissioner shall, upon receipt of such notice, forthwith notify such warehouseman that his license will be revoked on the date specified unless prior thereto a new bond, approved as provided in section one, is given by him to the state treasurer. Failure to give a new bond as aforesaid shall operate as a revocation of the license of such warehouseman, effective on said date, and the state treasurer shall forthwith notify the commissioner thereof in writing. The notification required to be sent by the commissioner shall be deemed sufficient if sent by registered mail, postage prepaid, to the last business or residence address of the licensee appearing in the records of the office of the commissioner; and the affidavit of the commissioner or of any person authorized by him to give notice that such notice has been sent in accordance with the section shall be prima facie evidence that such notice was duly given.
Such revocation of the license of a public warehouseman shall terminate the liability of the surety or sureties on his bond except for claims for or on account of goods, wares or merchandise deposited with him for storage prior to such revocation.
Section 2B. After the revocation of his license, the warehouseman shall accept for storage no more goods, wares or merchandise. Forthwith upon such revocation, he shall offer to return to the person or persons entitled thereto all goods, wares and merchandise then deposited for storage with him, upon payment in full of all lawful charges due him and the surrender of the warehouse or other proper receipts. Said warehouseman may, at any time after such revocation, store any goods, wares or merchandise in his possession with another public warehouseman, licensed as provided in section one, in the name and for the account of the person or persons entitled thereto; and, if within sixty days after such revocation, the warehouseman whose license is revoked so stores any goods, wares or merchandise, and transmits therewith a bill setting forth the accrued charges for storage thereon, he shall continue to have a lien therefor which shall be enforceable for his account by the licensed warehouseman with whom he places them in storage, otherwise he shall lose his lien for such charges.
Section 2C. Notwithstanding the foregoing provisions of this chapter, persons, or corporations established under the laws of, and having their places of business within, the commonwealth, may keep and maintain a public warehouse on the premises of any other person or corporation for the storage therein, under contract, of goods, wares and merchandise of such other person or corporation, without being licensed under this chapter.
Section 3. Whoever is injured by the failure of a licensed warehouseman to perform his duty or his violation of any provision of this chapter may bring an action for his own benefit, in the name of the commonwealth, on the bond of such warehouseman. The writ shall be endorsed by the person in whose behalf such action is brought, or by some other person satisfactory to the court; and the endorser shall be liable to the defendant for any costs which he may recover in such action, but the commonwealth shall not be liable for any costs.
Section 4. A licensed warehouseman shall, upon written request by a party placing property with him on storage, cause such property to be insured for whom it may concern. A railroad corporation acting as warehouseman may itself be the insurer.
Any warehouse receipt delivered to a depositor of family, personal or household goods shall contain the following notice conspicuously printed in at least eight point type: “The property which you are putting in storage is not covered by insurance against fire or theft. You may contact the warehouseman for instructions on placing insurance coverage for fire and theft on the deposited property.
”This section shall not apply to property stored pursuant to section 4 of chapter 239.
Section 5. Such warehouseman shall keep books in which shall be entered an account of all his transactions relative to the storing and insuring of goods, wares and merchandise, to the issuing of receipts therefor and to the disposition of proceeds of sales thereof under this chapter. Such books shall be open to the inspection of any person interested in the property to which the entries relate.
Chapter 105: Section 55. Issuance of receipt for goods not received Section 55. A warehouseman, or any officer, agent or servant of a warehouseman, who issues or aids in issuing a receipt, knowing that the goods for which such receipt is issued have not been actually received by such warehouseman, or are not under his actual control at the time of issuing such receipt, shall be punished by a fine of not more than five thousand dollars or by imprisonment in the state prison for not more than five years, or in a jail or house of correction for not more than two and one half years, or both.
Chapter 105: Section 56. Issuance of receipt containing false statement Section 56. A warehouseman, or any officer, agent or servant of a warehouseman, who fraudulently issues or aids in fraudulently issuing a receipt for goods, knowing that it contains any false statement, shall be punished by a fine of not more than one thousand dollars or by imprisonment for not more than one year, or both.
Chapter 105: Section 57. Issuance of unmarked duplicate receipts Section 57. A warehouseman, or any officer, agent or servant of a warehouseman, who issues or aids in issuing a duplicate or additional negotiable receipt for goods, knowing that a former negotiable receipt for the same goods or any part of them is outstanding and uncancelled, without plainly placing upon the face thereof the word “Duplicate”, except in the case of a lost or destroyed receipt after proceedings as provided for in subsection (1) of section seven—six hundred and one of chapter one hundred and six, shall be punished by a fine of not more than five thousand dollars or by imprisonment in the state prison for not more than five years or in a jail or house of correction for not more than two and one half years, or both.
Chapter 105: Section 58. Issuance of receipt not stating fact of ownership Section 58. If there are deposited with or held by a warehouseman goods of which he is owner, either solely or jointly or in common with others, such warehouseman, or any of his officers, agents or servants, who, knowing such ownership, issues or aids in issuing a negotiable receipt for such goods which does not state such ownership, shall be punished by a fine of not more than one thousand dollars or by imprisonment for not more than one year, or both.
Chapter 105: Section 59. Delivery of goods with negotiable receipt outstanding Section 59. A warehouseman, or any officer, agent or servant of a warehouseman, who delivers goods out of the possession of such warehouseman, knowing that a negotiable receipt the negotiation of which would transfer the right to the possession of such goods is outstanding and uncancelled, without obtaining the possession of such receipt at or before the time of such delivery, shall, except as provided in paragraph (c) of subsection (1) of section seven—four hundred and three and subsection (1) of section seven—six hundred and one of chapter one hundred and six, be punished by a fine of not more than one thousand dollars or by imprisonment for not more than one year, or both.
Section 6. The commissioner shall, at the expense of each warehouseman, give notice of his license and qualification, of the amount of the bond given by him and of any discontinuance of his license and shall, at the expense of any surety on his bond proceeding under section two A, give notice of the revocation of his license, by publishing such notice once in each week for three successive weeks in some newspaper published in the city or town where the warehouse is located.
Chapter 105: Section 60. Negotiation of receipt for mortgaged goods Section 60. Whoever deposits goods to which he has no title, or upon which there is a lien or mortgage, and takes for such goods a negotiable receipt which he afterwards negotiates for value with intent to deceive, and without disclosing his want of title or the existence of the lien or mortgage, shall be punished by a fine of not more than one thousand dollars or by imprisonment for not more than one year, or both.
Chapter 105: Section 61. Fraudulent negotiation or transfer of receipt Section 61. Whoever, with intent to deceive, negotiates or transfers for value a receipt, knowing that any or all of the goods which by the terms thereof appear to have been received for storage by the warehouseman issuing the receipt, are not in the possession or control of such warehouseman, without disclosing this fact, shall be punished by a fine of not more than five thousand dollars or by imprisonment in the state prison for not more than five years or in a jail or house of correction for not more than two and a half years, or both.
Chapter 105: Section 62. Unlawful sale, pledge or loan of deposited property Section 62. Whoever, with intent to injure or defraud, unlawfully sells, pledges, lends or in any other way disposes of, or permits or is a party to the unlawful selling, pledging, lending or other disposition of, any property stored in a public warehouse, without the authority of the person in whose name the same is stored, shall be punished by a fine of not more than five thousand dollars and by imprisonment in the state prison for not more than three years.
Chapter 105: Section 63. Forging or counterfeiting warehouse receipts Section 63. Whoever falsely makes, utters, forges or counterfeits, or whoever permits or is a party to the false making, uttering, forging or counterfeiting of, a warehouse receipt, certificate or other instrument, or of the signature of a warehouseman or of an endorser or other person to an instrument used to pass or to give title to property stored in a public warehouse, shall be punished by a fine of not more than five thousand dollars and by imprisonment in the state prison for not more than three years.
Chapter 105: Section 64. Disposing of receipt after attachment Section 64. Whoever, knowing that his interest in the property described in a warehouse receipt has been attached, endorses, assigns or otherwise disposes of such receipt without disclosing such attachment to the person to whom such receipt is endorsed, assigned or disposed of, shall be punished by a fine of not more than five thousand dollars and by imprisonment in the state prison for not more than three years, or by imprisonment in a jail or house of correction for not more than one year.
Chapter 105: Section 65, 66. Repealed, 1957, 765, Sec. 2 Section 1. As used in this chapter, the following words shall, unless the context clearly requires otherwise, have the following meanings:—“Self-service storage facility”, any real property used for renting or leasing individual storage spaces in which the occupants themselves customarily store and remove their own personal property on a “self-service” basis.
“Rental agreement”, any written agreement that establishes or modifies the terms, conditions, or rules concerning the use and occupancy of a self-service storage facility.
“Leased space”, the individual storage space at the self-service facility which is rented to an occupant pursuant to a rental agreement.
“Occupant”, a person, a sublessee, successor, or assign, entitled to the use of a leased space at a self-service storage facility under a rental agreement.
“Operator”, the owner, operator, lessor or sublessor of a self-service storage facility, an agent or any other person authorized to manage the facility and shall not mean a warehouseman, unless the operator issues a warehouse receipt, bill of lading, or other document of title for the personal property stored.
“Personal property”, movable property, not affixed to land, including but not limited to, goods, wares, merchandise, motor vehicles, watercraft, and household items and furnishings.
“Default”, the failure to perform on time any obligation or duty set forth in the rental agreement.
“Last known address”, that address provided by the occupant in the rental agreement or the address provided by the occupant in a subsequent written notice of a change of address.
Section 2. The operator may only lease space in a self-service storage facility by entering in to a rental agreement with an occupant.
An operator may not knowingly permit a leased space at a self-service storage facility to be used for residential purposes.
An occupant may not use a leased space for residential purposes.
Section 3. The operator of a self-service storage facility shall have a lien on all personal property stored within each leased space for rent, labor, insurance or other charges in relationship to the property and for expenses necessary for the preservation of the property or reasonably incurred in its sale pursuant to this chapter.
An operator shall lose such lien on any goods which such operator voluntarily delivers or which he unjustifiably refuses to deliver.
The rental agreement shall contain a statement, in bold type, advising the occupant: (a) that property stored in the leased space is not insured by the operator against loss or damage; (b) of the existence of the lien; and (c) that property stored in the leased space may be sold to satisfy the lien if the occupant is in default.
Section 4. After default, an operator’s lien may be enforced by selling the property stored in the leased space at a public or private sale, but only in accordance with the following procedure:(1) No sooner than five days after such default, the occupant and all other persons known to claim an interest in the goods shall be notified by regular mail sent to the last known address of any person to be notified.
(2) No sooner than fourteen days after default, the occupant and all other persons known to claim an interest in the goods shall be notified by certified mail, return receipt requested, sent to the last known address of any person to be notified, or by hand delivery of said notification.
(3) The notification shall include: (a) a statement that the contents of the occupant’s leased space are subject to the operator’s lien; (b) a general description of the contents, if known, by the operator; (c) a statement of the operator’s claim, indicating the charges due on the date of the notice, the amount of any additional charges which shall become due before the date of sale, and the date such additional charges shall become due; (d) a demand for payment of the charges due within a specified time, not less than fourteen days after receipt of notification; (e) a statement that unless the claim is paid within the time stated, the contents of the occupant’s space will be advertised for sale and sold at auction at a specified time and place; and (f) the name, street address, and telephone number of the operator, or his designated agent, whom the occupant may contact to respond to the notice.
(4) After the expiration of the time given in the notification, an advertisement of the sale must be published once a week for two consecutive weeks in a newspaper of general circulation in the city or town where the sale is to be held. The advertisement must include a description of the property, the name of the person on whose account they are being held, and the time and place of the sale. The sale must take place at least fifteen days after the first publication. If there is no newspaper of general circulation in the city or town where the sale is to be held, the advertisement must be posted at least ten days before the sale in not less than six conspicuous places in the neighborhood of the proposed sale.
(5) Before any sale pursuant to this section any person claiming a right in the property may pay the amount necessary to satisfy the lien and the reasonable expenses incurred under this section. In such event, the property must not be sold, but must be released to the payor.
(6) The operator may buy at any public sale pursuant to this section.
(7) The sale shall be at the self-service storage facility where the personal property is stored or at the nearest suitable place.
(8) The sale must conform to the terms of the notification.
(9) A purchaser in good faith of goods sold to enforce an operator’s lien takes the property free of any rights of persons against whom the lien was valid, despite noncompliance by the operator with the requirements of this section.
(10) The operator may satisfy his lien from the proceeds of any sale pursuant to this section but must hold the balance, if any, for release on demand to the occupant or to any person to whom he would have been bound to release the property.
(11) The rights provided by this section shall be in addition to all other rights allowed by law to a creditor against his debtor.
(12) The operator shall be liable for damages caused by failure to comply with the requirements for sale under this section and in case of willful violation shall be liable for conversion.
Section 5. If an occupant is in default for a period of five days or more, the operator may deny the occupant access to the leased space in a reasonable and peaceable manner; provided, however, that the occupant may have access at any time for the sole purpose of viewing the contents of his leased space in order to verify the contents therein.
Section 6. Unless otherwise specifically provided, all notices required by this chapter shall be sent by certified mail.
Notices sent to the operator shall be sent to the self-service storage facility where the occupant’s property is stored. Notices to the occupant shall be sent to the occupant at the occupant’s last known address.
Except in the case of certified mail, notices shall be deemed delivered when deposited with the United States Postal Service, properly addressed as provided in the second paragraph, with postage paid.
Section 7. Except as otherwise provided herein or as stated in the rental agreement, the exclusive care, custody and control of all property stored in the leased self-service space shall vest in the occupant until a lien sale under the provisions of this chapter.
Section 8. Any violation by an operator of the provisions of this chapter shall be deemed unfair or deceptive acts or trade practices under the provisions of chapter ninety-three A.
PART 1. SHORT TITLE, CONSTRUCTION, APPLICATION AND SUBJECT MATTER Chapter 106: Section 1-101. Short Title Section 1-101. This Chapter shall be known and may be cited as the Uniform Commercial Code.
PART 1. SHORT TITLE, CONSTRUCTION, APPLICATION AND SUBJECT MATTER Chapter 106: Section 1-102. Purposes; Rules of Construction; Variation by Agreement Section 1-102. (1) This chapter shall be liberally construed and applied to promote its underlying purposes and policies.
(2) Underlying purposes and policies of this chapter are(a) to simplify, clarify and modernize the law governing commercial transactions;(b) to permit the continued expansion of commercial practices through custom, usage and agreement of the parties;(c) to make uniform the law among the various jurisdictions.
(3) The effect of provisions of this chapter may be varied by agreement, except as otherwise provided in this chapter and except that the obligations of good faith, diligence, reasonableness and care prescribed by this chapter may not be disclaimed by agreement but the parties may by agreement determine the standards by which the performance of such obligations is to be measured if such standards are not manifestly unreasonable.
(4) The presence in certain provisions of this chapter of the words “unless otherwise agreed” or words of similar import does not imply that the effect of other provisions may not be varied by agreement under subsection (3).
PART 1. SHORT TITLE, CONSTRUCTION, APPLICATION AND SUBJECT MATTER Chapter 106: Section 1-103. Supplementary General Principles of Law Applicable Section 1-103. Unless displaced by the particular provisions of this chapter, the principles of law and equity, including the law merchant and the law relative to capacity to contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy, or other validating or invalidating cause shall supplement its provisions.
PART 1. SHORT TITLE, CONSTRUCTION, APPLICATION AND SUBJECT MATTER Chapter 106: Section 1-104. Construction Against Implicit Repeal Section 1-104. This chapter being intended as a unified coverage of its subject matter, no part of it shall be deemed to be impliedly repealed by subsequent legislation if such construction can reasonably be avoided.
PART 1. SHORT TITLE, CONSTRUCTION, APPLICATION AND SUBJECT MATTER Chapter 106: Section 1-105. Territorial Application of Chapter; Parties’ Power to Choose Applicable Law Section 1-105. (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 2-402.
Applicability of the Article on Leases. Sections 2A-105 and 2A-106.
Applicability of the Article on Bank Deposits and Collections. Section 4-102.
Applicability of the Article on Investment Securities. Section 8-110.
Law governing perfection, the effect of perfection or nonperfection, and the priority of security interests. Sections 9-301 to 9-307, inclusive.
Governing law in the Article on Funds Transfers. Section 4A-507.
Letters of Credit. Section 5-116.
(3) In this act unless the context otherwise requires:(a) words in the singular number include the plural, and in the plural include the singular;(b) words of the masculine gender include the feminine and the neuter, and when the sense so indicates words of the neuter gender may refer to any gender.
PART 1. SHORT TITLE, CONSTRUCTION, APPLICATION AND SUBJECT MATTER Chapter 106: Section 1-106. Remedies to be Liberally Administered Section 1-106. (1) The remedies provided by this chapter shall be liberally administered to the end that the aggrieved party may be put in as good a position as if the other party had fully performed but neither consequential or special nor penal damages may be had except as specifically provided in this chapter or by other rule of law.
(2) Any right or obligation declared by this chapter is enforceable by action unless the provision declaring it specifies a different and limited effect.
PART 1. SHORT TITLE, CONSTRUCTION, APPLICATION AND SUBJECT MATTER Chapter 106: Section 1-107. Waiver or Renunciation of Claim or Right After Breach Section 1-107. Any claim or right arising out of an alleged breach can be discharged in whole or in part without consideration by a written waiver or renunciation signed and delivered by the aggrieved party.
PART 1. SHORT TITLE, CONSTRUCTION, APPLICATION AND SUBJECT MATTER Chapter 106: Section 1-108. Severability Section 1-108. If any provision or clause of this chapter or application thereof to any person or circumstances is held invalid, such invalidity shall not affect other provisions or applications of the chapter which can be given effect without the invalid provision or application, and to this end the provisions of this chapter are declared to be severable.
PART 1. SHORT TITLE, CONSTRUCTION, APPLICATION AND SUBJECT MATTER Chapter 106: Section 1-109. Section Captions Section 1-109. Section captions are parts of this chapter. The subsection headings in Article 9 are not parts of this chapter.
PART 2. GENERAL DEFINITIONS AND PRINCIPLES OF INTERPRETATION Chapter 106: Section 1-201. General Definitions Section 1-201. Subject to additional definitions contained in the subsequent Articles of this chapter which are applicable to specific Articles or Parts thereof, and unless the context otherwise requires, in this chapter(1) “Action” in the sense of a judicial proceeding includes recoupment, counterclaim, set-off, suit in equity and any other proceedings in which rights are determined.
(2) “Aggrieved party” means a party entitled to resort to a remedy.
(3) “Agreement” means the bargain of the parties 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 (sections 1-205 and 2-208). Whether an agreement has legal consequences is determined by the provisions of this chapter, if applicable; otherwise by the law of contracts (section 1-103). (Compare “Contract.
”)(4) “Bank” means any person engaged in the business of banking.
(5) “Bearer” means the person in possession of an instrument, document of title, or certificated security payable to bearer or indorsed in blank.
(6) “Bill of lading” means a document evidencing the receipt of goods for shipment issued by a person engaged in the business of transporting or forwarding goods, and includes an airbill. “Airbill” means a document serving for air transportation as a bill of lading does for marine or rail transportation, and includes an air consignment note or air waybill.
(7) “Branch” includes a separately incorporated foreign branch of a bank.
(8) “Burden of establishing” a fact means the burden of persuading the triers of fact that the existence of the fact is more probable than its non-existence.
(9) “Buyer in ordinary course of business” means a person that buys goods in good faith, without knowledge that the sale violates the rights of another person in the goods, and in the ordinary course from a person, other than a pawnbroker, in the business of selling goods of that kind. A person buys goods in the ordinary course if the sale to the person comports with the usual or customary practices in the kind of business in which the seller is engaged or with the seller’s own usual or customary practices. A person that sells oil, gas, or other minerals at the wellhead or minehead is a person in the business of selling goods of that kind. A buyer in ordinary course of business may buy for cash, by exchange of other property, or on secured or unsecured credit, and may acquire goods or documents of title under a pre-existing contract for sale. Only a buyer that takes possession of the goods or has a right to recover the goods from the seller under Article 2 may be a buyer in ordinary course of business. A person that acquires goods in a transfer in bulk or as security for or in total or partial satisfaction of a money debt is not a buyer in ordinary course of business.
(10) “Conspicuous”: A term or clause is conspicuous when it is so written that a reasonable person against whom it is to operate ought to have noticed it. A printed heading in capitals (as: NON-NEGOTIABLE BILL OF LADING) is conspicuous. Language in the body of a form is “conspicuous” if it is in larger or other contrasting type or color. But in a telegram any stated term is “conspicuous”. Whether a term or clause is “conspicuous” or not is for decision by the court.
(11) “Contract” means the total legal obligation which results from the parties’ agreement as affected by this chapter and any other applicable rules of law. (Compare “Agreement.
”)(12) “Creditor” includes a general creditor, a secured creditor, a lien creditor and any representative of creditors, including an assignee for the benefit of creditors, a trustee in bankruptcy, a receiver in equity and an executor or administrator of an insolvent debtor’s or assignor’s estate.
(13) “Defendant” includes a person in the position of defendant in a cross-action or counterclaim.
(14) “Delivery” with respect to instruments, documents of title, chattel paper, or certificated securities means voluntary transfer of possession.
(15) “Document of title” includes bill of lading, dock warrant, dock receipt, warehouse receipt or order for the delivery of goods, and also any other document which in the regular course of business or financing is treated as adequately evidencing that the person in possession of it is entitled to receive, hold and dispose of the document and the goods it covers. To be a document of title a document must purport to be issued by or addressed to a bailee and purport to cover goods in the bailee’s possession which are either identified or are fungible portions of an identified mass.
(16) “Fault” means wrongful act, omission or breach.
(17) “Fungible” with respect to goods or securities means goods or securities of which any unit is, by nature or usage of trade, the equivalent of any other like unit. Goods which are not fungible shall be deemed fungible for the purposes of this chapter to the extent that under a particular agreement or document unlike units are treated as equivalents.
(18) “Genuine” means free of forgery or counterfeiting.
(19) “Good faith” means honesty in fact in the conduct or transaction concerned.
(20) “Holder” with respect to a negotiable instrument, means the person in possession if the instrument is payable to bearer or, in the case of an instrument payable to an identified person, if the identified person is in possession. “Holder”, with respect to a document of title, means the person in possession if the goods are deliverable to bearer or to the order of the person in possession.
(21) To “honor” is to pay or to accept and pay, or where a credit so engages to purchase or discount a draft complying with the terms of the credit.
(22) “Insolvency proceedings” includes any assignment for the benefit of creditors or other proceedings intended to liquidate or rehabilitate the estate of the person involved.
(23) A person is “insolvent” who either has ceased to pay his debts in the ordinary course of business or cannot pay his debts as they become due or is insolvent within the meaning of the federal bankruptcy law.
(24) “Money” means a medium of exchange authorized or adopted by a domestic or foreign government and includes a monetary unit of account established by an intergovernmental organization or by agreement between two or more nations.
(25) A person has “notice” of a fact when (a) he has actual knowledge of it; or (b) he has received a notice or notification of it; or (c) from all the facts and circumstances known to him at the time in question he has reason to know that it exists. A person “knows” or has “knowledge” of a fact when he has actual knowledge of it. “Discover” or “learn” or a word or phrase of similar import refers to knowledge rather than to reason to know. The time and circumstances under which a notice or notification may cease to be effective are not determined by this chapter.
(26) A person “notifies” or “gives” a notice or notification to another by taking such steps as may be reasonably required to inform the other in ordinary course whether or not such other actually comes to know of it. A person “receives” a notice or notification when(a) it comes to his attention; or(b) it is duly delivered at the place of business through which the contract was made or at any other place held out by him as the place for receipt of such communications.
(27) Notice, knowledge or a notice or notification received by an organization is effective for a particular transaction from the time when it is brought to the attention of the individual conducting that transaction, and in any event from the time when it would have been brought to his attention if the organization had exercised due diligence. An organization exercises due diligence if it maintains reasonable routines for communicating significant information to the person conducting the transaction and there is reasonable compliance with the routines. Due diligence does not require an individual acting for the organization to communicate information unless such communication is part of his regular duties or unless he has reason to know of the transaction and that the transaction would be materially affected by the information.
(28) “Organization” includes a corporation, government or governmental subdivision or agency, business trust, estate, trust, partnership or association, two or more persons having a joint or common interest, or any other legal or commercial entity.
(29) “Party”, as distinct from “third party”, means a person who has engaged in a transaction or made an agreement within this chapter.
(30) “Person” includes an individual or an organization.
(31) “Presumption” or “presumed” means that the trier of fact must find the existence of the fact presumed unless and until evidence is introduced which would support a finding of its non-existence.
(32) “Purchase” includes taking by sale, discount, negotiation, mortgage, pledge, lien, security interest, issue or re-issue, gift or any other voluntary transaction creating an interest in property.
(33) “Purchaser” means a person or his nominee who takes by purchase.
(34) “Remedy” means any remedial right to which an aggrieved party is entitled with or without resort to a tribunal.
(35) “Representative” includes an agent, an officer of a corporation or association, and a trustee, executor or administrator of an estate, or any other person empowered to act for another.
(36) “Rights” includes remedies.
(37) “Security interest” means an interest in personal property or fixtures which secures payment or performance of an obligation. The term also 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 Article 9. The special property interest of a buyer of goods on identification of those goods to a contract for sale under Section 2-401 is not a “security interest”, but a buyer may also acquire a ‘ security interest‘ by complying with Article 9.
Except as otherwise provided in Section 2-505, the right of a seller or lessor of goods under Article 2 or 2A to retain or acquire possession of the goods is not a “security interest” but a seller or lessor may also acquire a “security interest” by complying with Article 9. The retention or reservation of title by a seller of goods notwithstanding shipment or delivery to the buyer (Section 2-401) is limited in effect to a reservation of a “security interest”.
Whether a transaction creates a lease or “security interest” is determined by the facts of each case; however, a transaction creates a “security interest” if the consideration the lessee is to pay the lessor for the right to possession and use of the goods is an obligation for the term of the lease not subject to termination by the lessee, and:(a) the original term of the lease is equal to or greater than the remaining economic life of the goods,(b) the lessee is bound to renew the lease for the remaining economic life of the goods or is bound to become the owner of the goods,(c) the lessee has an option to renew the lease for the remaining economic life of the goods for no additional consideration or nominal additional consideration upon compliance with the lease agreement, or(d) the lessee has an option to become the owner of the goods for no additional consideration or nominal additional consideration upon compliance with the lease agreement.
A transaction does not create a “security interest” because it provides that:(a) the present value of the consideration the lessee is obligated to pay the lessor for the right to possession and use of the goods is substantially equal to or greater than the fair market value of the goods at the time the lease is entered into,(b) the lessee assumes risk of loss of the goods, or agrees to pay taxes, insurance, filing, recording, or registration fees, or service or maintenance costs with respect to the goods,(c) the lessee has an option to renew the lease or to become the owner of the goods,(d) the lessee has an option to renew the lease for a fixed rent that is equal to or greater than the reasonably predictable fair market rent for the use of the goods for the term of the renewal at the time the option is to be performed, or(e) the lessee has an option to become the owner of the goods for a fixed price that is equal to or greater than the reasonably predictable fair market value of the goods at the time the option is to be performed.
For purposes of this subsection:(a) Additional consideration is not nominal if (i) when the option to renew the lease is granted to the lessee the rent is stated to be the fair market rent for the use of the goods for the term of the renewal determined at the time the option is to be performed, or (ii) when the option to become the owner of the goods is granted to the lessee the price is stated to be the fair market value of the goods determined at the time the option is to be performed. Additional consideration is nominal if it is less than the lessee’s reasonably predictable cost of performing under the lease agreement if the option is not exercised;(b) “Reasonably predictable” and “remaining economic life of the goods” are to be determined with reference to the facts and circumstances at the time the transaction is entered into; and(c) “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 is not manifestly unreasonable at the time the transaction is 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.
(38) “Send” in connection with any writing or notice means to deposit in the mail or deliver for transmission 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 to any address reasonable under the circumstances. The receipt of any writing or notice within the time at which it would have arrived if properly sent has the effect of a proper sending.
(39) “Signed” includes any symbol executed or adopted by a party with present intention to authenticate a writing.
(40) “Surety” includes guarantor.
(41) “Telegram” includes a message transmitted by radio, teletype, cable, any mechanical method of transmission, or the like.
(42) “Term” means that portion of an agreement which relates to a particular matter.
(43) “Unauthorized signature”, one made without actual, implied, or apparent authority and includes a forgery.
(44) “Value”. Except as otherwise provided with respect to negotiable instruments and bank collections (sections 3-303, 4-210 and 4-211) a person gives “value” for rights if he acquires them(a) 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; or(b) as security for or in total or partial satisfaction of a pre-existing claim; or(c) by accepting delivery pursuant to a pre-existing contract for purchase; or(d) generally, in return for any consideration sufficient to support a simple contract.
(45) “Warehouse receipt” means a receipt issued by a person engaged in the business of storing goods for hire.
(46) “Written” or “writing” includes printing, typewriting or any other intentional reduction to tangible form.
PART 2. GENERAL DEFINITIONS AND PRINCIPLES OF INTERPRETATION Chapter 106: Section 1-202. Prima Facie Evidence by Third Party Documents Section 1-202. A document in due form purporting to be a bill of lading, policy or certificate of insurance, official weigher’s or inspector’s certificate, consular invoice, or any other document authorized or required by the contract to be issued by a third party shall be prima facie evidence of its own authenticity and genuineness and of the facts stated in the document by the third party.
PART 2. GENERAL DEFINITIONS AND PRINCIPLES OF INTERPRETATION Chapter 106: Section 1-203. Obligation of Good Faith Section 1-203. Every contract or duty within this chapter imposes an obligation of good faith in its performance or enforcement.
PART 2. GENERAL DEFINITIONS AND PRINCIPLES OF INTERPRETATION Chapter 106: Section 1-204. Time; Reasonable Time; “Seasonably” Section 1-204. (1) Whenever this chapter requires any action to be taken within a reasonable time, any time which is not manifestly unreasonable may be fixed by agreement.
(2) What is a reasonable time for taking any action depends on the nature, purpose and circumstances of such action.
(3) An action is taken “seasonably” when it is taken at or within the time agreed or if no time is agreed at or within a reasonable time.
PART 2. GENERAL DEFINITIONS AND PRINCIPLES OF INTERPRETATION Chapter 106: Section 1-205. Course of Dealing and Usage of Trade Section 1-205. (1) A course of dealing is a sequence of previous conduct between the parties to a particular transaction which is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct.
(2) A usage of trade is any practice or method of dealing having such regularity of observance in a place, vocation or trade as to justify an expectation that it will be observed with respect to the transaction in question. The existence and scope of such a usage are to be proved as facts. If it is established that such a usage is embodied in a written trade code or similar writing the interpretation of the writing is for the court.
(3) A course of dealing between parties and any usage of trade in the vocation or trade in which they are engaged or of which they are or should be aware give particular meaning to and supplement or qualify terms of an agreement.
(4) The express terms of an agreement and an applicable course of dealing or usage of trade shall be construed wherever reasonable as consistent with each other; but when such construction is unreasonable express terms control both course of dealing and usage of trade and course of dealing controls usage of trade.
(5) An applicable usage of trade in the place where any part of performance is to occur shall be used in interpreting the agreement as to that part of the performance.
(6) Evidence of a relevant usage of trade offered by one party is not admissible unless and until he has given the other party such notice as the court finds sufficient to prevent unfair surprise to the latter.
PART 2. GENERAL DEFINITIONS AND PRINCIPLES OF INTERPRETATION Chapter 106: Section 1-206. Statute of Frauds for Kinds of Personal Property Not Otherwise Covered Section 1-206. (1) Except in the cases described in subsection (2) of this section a contract for the sale of personal property is not enforceable by way of action or defense beyond five thousand dollars in amount or value of remedy unless there is some writing which indicates that a contract for sale has been made between the parties at a defined or stated price, reasonably identifies the subject matter, and is signed by the party against whom enforcement is sought or by his authorized agent.
(2) Subsection (1) of this section does not apply to contracts for the sale of goods (section 2-201) nor of securities (section 8-113) nor to security agreements (section 9-203).
PART 2. GENERAL DEFINITIONS AND PRINCIPLES OF INTERPRETATION Chapter 106: Section 1-207. Performance or Acceptance under Reservation of Rights Section 1-207. (1) A party who, with explicit reservation of rights, performs or promises performance or assents to performance in a manner demanded or offered by the other party does not thereby prejudice the rights reserved. Such words as “without prejudice”, “under protest” or the like are sufficient.
(2) Subsection (1) does not apply to an accord and satisfaction.
PART 2. GENERAL DEFINITIONS AND PRINCIPLES OF INTERPRETATION Chapter 106: Section 1-208. Option to Accelerate at Will Section 1-208. A term providing that one party or his successor in interest may accelerate payment or performance or require collateral or additional collateral “at will” or “when he deems himself insecure” or in words of similar import shall be construed to mean that he shall have power to do so only if he in good faith believes that the prospect of payment or performance is impaired. The burden of establishing lack of good faith is on the party against whom the power has been exercised.
PART 2. GENERAL DEFINITIONS AND PRINCIPLES OF INTERPRETATION Chapter 106: Section 1-209. Subordinated Obligations Section 1-209. An obligation may be issued as subordinated to payment of another obligation of the person obligated, or a creditor may subordinate his right to payment of an obligation by agreement with either the person obligated or another creditor of the person obligated. Such a subordination does not create a security interest as against either the common debtor or a subordinated creditor. This section shall be construed as declaring the law as it existed prior to the enactment of this section and not as modifying it.
PART 1. SHORT TITLE, GENERAL CONSTRUCTION AND SUBJECT MATTER Chapter 106: Section 2-101. Short title Section 2-101. This Article shall be known and may be cited as Uniform Commercial Code—Sales.
PART 1. SHORT TITLE, GENERAL CONSTRUCTION AND SUBJECT MATTER Chapter 106: Section 2-102. Scope; Certain Security and other Transactions Excluded from this Article Section 2-102. Unless the context otherwise requires, this Article applies to transactions in goods; 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 Article impair or repeal any statute regulating sales to consumers, farmers or other specified classes of buyers.
PART 1. SHORT TITLE, GENERAL CONSTRUCTION AND SUBJECT MATTER Chapter 106: Section 2-103. Definitions and Index of Definitions Section 2-103. (1) In this Article unless the context otherwise requires(a) “Buyer” means a person who buys or contracts to buy goods.
(b) “Good faith” in the case of a merchant means honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade.
(c) “Receipt” of goods means taking physical possession of them.
(d) “Seller” means a person who sells or contracts to sell goods.
(2) Other definitions applying to this Article or to specified parts thereof, and the sections in which they appear are“Acceptance”. Section 2-606.
“Banker’s credit”. Section 2-325.
“Between merchants”. Section 2-104.
“Cancellation”. Section 2-106(4).
“Commercial unit”. Section 2-105.
“Confirmed credit”. Section 2-325.
“Conforming to contract”. Section 2-106.
“Contract for sale”. Section 2-106.
“Cover”. Section 2-712.
“Entrusting”. Section 2-403.
“Financing agency”. Section 2-104.
“Future goods”. Section 2-105.
“Goods”. Section 2-105.
“Identification”. Section 2-501.
“Installment contract”. Section 2-612.
“Letter of credit”. Section 2-325.
“Lot”. Section 2-105.
“Merchant”. Section 2-104.
“Overseas”. Section 2-323.
“Person in position of seller”. Section 2-707.
“Present sale”. Section 2-106.
“Sale”. Section 2-106.
“Sale on approval”. Section 2-326.
“Sale or return”. Section 2-326.
“Termination”. Section 2-106.
(3) The following definitions in other Articles apply to this Article:“Check”. Section 3-104.
“Consignee”. Section 7-102.
“Consignor”. Section 7-102.
“Consumer goods”. Section 9-102.
“Dishonor”. Section 3-502.
“Draft”. Section 3-104.
(4) In addition Article 1 contains general definitions and principles of construction and interpretation applicable throughout this Article.
PART 1. SHORT TITLE, GENERAL CONSTRUCTION AND SUBJECT MATTER Chapter 106: Section 2-104. Definitions: “Merchant”; “Between Merchants”; “Financing Agency” Section 2-104. (1) “Merchant” means a person who deals in goods of the kind or otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction or to whom such knowledge or skill may be attributed by his employment of an agent or broker or other intermediary who by his occupation holds himself out as having such knowledge or skill.
(2) “Financing agency” means a bank, finance company or other person who in the ordinary course of business makes advances against goods or documents of title or who by arrangement with either the seller or the buyer intervenes in ordinary course to make or collect payment due or claimed under the contract for sale, as by purchasing or paying the seller’s draft or making advances against it or by merely taking it for collection whether or not documents of title accompany the draft. “Financing agency” includes also a bank or other person who similarly intervenes between persons who are in the position of seller and buyer in respect to the goods (section 2-707).
(3) “Between merchants” means in any transaction with respect to which both parties are chargeable with the knowledge or skill of merchants.
PART 1. SHORT TITLE, GENERAL CONSTRUCTION AND SUBJECT MATTER Chapter 106: Section 2-105. Definitions; Transferability; “Goods”; “Future” Goods; “Lot”; “Commercial Unit” Section 2-105. (1) “Goods” means all things (including specially manufactured goods) which are movable at the time of identification to the contract for sale other than the money in which the price is to be paid, investment securities (Article 8) and things in action. “Goods” also includes the unborn young of animals and growing crops and other identified things attached to realty as described in the section on goods to be severed from realty (section 2-107).
(2) Goods must be both existing and identified before any interest in them can pass. Goods which are not both existing and identified are “future” goods. A purported present sale of future goods or of any interest therein operates as a contract to sell.
(3) There may be a sale of a part interest in existing identified goods.
(4) An undivided share in an identified bulk of fungible goods is sufficiently identified to be sold although the quantity of the bulk is not determined. Any agreed proportion of such a bulk or any quantity thereof agreed upon by number, weight or other measure may to the extent of the seller’s interest in the bulk be sold to the buyer who then becomes an owner in common.
(5) “Lot” means a parcel or a single article which is the subject matter of a separate sale or delivery, whether or not it is sufficient to perform the contract.
(6) “Commercial unit” means such a unit of goods as by commercial usage is a single whole for purposes of sale 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 an assortment of sizes) or a quantity (as a bale, gross, or carload) or any other unit treated in use or in the relevant market as a single whole.
PART 1. SHORT TITLE, GENERAL CONSTRUCTION AND SUBJECT MATTER Chapter 106: Section 2-106. Definitions: “Contract”; “Agreement”; “Contract for Sale”; “Sale”; “Present Sale”; “Conforming” to Contract; “Termination”; “Cancellation” Section 2-106. (1) In this Article 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 (section 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 of any unperformed balance.
PART 1. SHORT TITLE, GENERAL CONSTRUCTION AND SUBJECT MATTER Chapter 106: Section 2-107. Goods to be Severed from Realty; Recording Section 2-107. (1) A contract for the sale of minerals or the like, including oil and gas, or a structure or its materials to be removed from realty is a contract for the sale of goods within this Article if they are to be severed by the seller but until severance a purported present sale thereof which is not effective as a transfer of an interest in land is effective only as a contract to sell.
(2) A contract for the sale apart from the land of growing crops or other things attached to realty and capable of severance without material harm thereto but not described in subsection (1) or of timber to be cut is a contract for the sale of goods within this Article whether the subject matter is to be severed by the buyer or by the seller even though it forms part of the realty at the time of contracting, and the parties can by identification effect a present sale before severance.
(3) The provisions of this section are subject to any third party rights provided by the law relating to realty records, and the contract for sale may be executed and recorded as a document transferring an interest in land and shall then constitute notice to third parties of the buyer’s rights under the contract for sale.
PART 2. FORM, FORMATION AND READJUSTMENT OF CONTRACT Chapter 106: Section 2-201. Formal Requirements: Statute of Frauds Section 2-201. (1) Except as otherwise provided in this section a contract for the sale of goods for the price of five hundred dollars or more is not enforceable by way of action or defense unless there is some writing 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 authorized agent or broker. A writing is not insufficient because it omits or incorrectly states a term agreed upon but the contract is not enforceable under this paragraph beyond the quantity of goods shown in such writing.
(2) Between merchants if within a reasonable time a writing 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 party unless written notice of objection to its contents is given within ten 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 (section 2-606).
PART 2. FORM, FORMATION AND READJUSTMENT OF CONTRACT Chapter 106: Section 2-202. Final Written Expression: Parol or Extrinsic Evidence Section 2-202. Terms with respect to which the confirmatory memoranda of the parties agree or which are otherwise set forth in a writing 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 (section 1-205) or by course of performance (section 2-208); and(b) by evidence of consistent additional terms unless the court finds the writing to have been intended also as a complete and exclusive statement of the terms of the agreement.
PART 2. FORM, FORMATION AND READJUSTMENT OF CONTRACT Chapter 106: Section 2-203. Seals Inoperative Section 2-203. The affixing of a seal to a writing evidencing a contract for sale or an offer to buy or sell goods does not constitute the writing a sealed instrument and the law with respect to sealed instruments does not apply to such a contract or offer.
PART 2. FORM, FORMATION AND READJUSTMENT OF CONTRACT Chapter 106: Section 2-204. Formation in General Section 2-204. (1) A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract.
(2) An agreement sufficient to constitute a contract for sale may be found even though the moment of its making is undetermined.
(3) Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy.
PART 2. FORM, FORMATION AND READJUSTMENT OF CONTRACT Chapter 106: Section 2-205. Firm Offers Section 2-205. An offer by a merchant to buy or sell goods in a signed writing 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 months; but any such term of assurance on a form supplied by the offeree must be separately signed by the offeror.
PART 2. FORM, FORMATION AND READJUSTMENT OF CONTRACT Chapter 106: Section 2-206. Offer and Acceptance in Formation of Contract Section 2-206. (1) Unless otherwise unambiguously indicated by the language or circumstances(a) an offer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances;(b) an order or other offer to buy goods for prompt or current shipment shall be construed as inviting acceptance either by a prompt promise to ship or by the prompt or current shipment of conforming or non-conforming goods, but such a shipment of non-conforming goods does not constitute an acceptance if the seller seasonably notifies the buyer that the shipment is offered only as an accommodation to the buyer.
(2) Where the beginning of a requested performance is a reasonable mode of acceptance an offeror who is not notified of acceptance within a reasonable time may treat the offer as having lapsed before acceptance.
PART 2. FORM, FORMATION AND READJUSTMENT OF CONTRACT Chapter 106: Section 2-207. Additional Terms in Acceptance or Confirmation Section 2-207. (1) A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms.
(2) The additional or different terms are to be construed as proposals for addition to the contract. Between merchants such terms become part of the contract unless:(a) the offer expressly limits acceptance to the terms of the offer;(b) they materially alter it; or(c) notification of objection to them has already been given or is given within a reasonable time after notice of them is received.
(3) Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract. In such case the terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of this chapter.
PART 2. FORM, FORMATION AND READJUSTMENT OF CONTRACT Chapter 106: Section 2-208. Course of Performance or Practical Construction Section 2-208. (1) Where the contract for sale involves repeated occasions for performance by either party with knowledge of the nature of the performance and opportunity for objection to it by the other, any course of performance accepted or acquiesced in without objection shall be relevant to determine the meaning of the agreement.
(2) The express terms of the agreement and any such course of performance, as well as any course of dealing and usage of trade, shall be construed whenever reasonable as consistent with each other; but when such construction is unreasonable, express terms shall control course of performance and course of performance shall control both course of dealing and usage of trade (section 1-205).
(3) Subject to the provisions of the next section on modification and waiver, such course of performance shall be relevant to show a waiver or modification of any term inconsistent with such course of performance.
PART 2. FORM, FORMATION AND READJUSTMENT OF CONTRACT Chapter 106: Section 2-209. Modification, Rescission and Waiver Section 2-209. (1) An agreement modifying a contract within this Article needs no consideration to be binding.
(2) A signed agreement which excludes modification or rescission except by a signed writing 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.
(3) The requirements of the Statute of Frauds section of this Article (section 2-201) must be satisfied if the contract as modified is within its provisions.
(4) Although an attempt at modification or rescission does not satisfy the requirements of subsection (2) or (3) it can operate as a waiver.
(5) A party who has made a waiver affecting an executory portion of the contract may retract the waiver by reasonable notification received by the other party that strict performance will be required of any term waived, unless the retraction would be unjust in view of a material change of position in reliance on the waiver.
PART 2. FORM, FORMATION AND READJUSTMENT OF CONTRACT Chapter 106: Section 2-210. Delegation of Performance; Assignment of Rights Section 2-210. (1) A party may perform his duty through a delegate unless otherwise agreed or unless the other party has a substantial interest in having his original promisor perform or control the acts required by the contract. No delegation of performance relieves the party delegating of any duty to perform or any liability for breach.
(2) Except as otherwise provided in Section 9-405, unless otherwise agreed all rights of either seller or buyer can be assigned except where the assignment would materially change the duty of the other party, or increase materially the burden or risk imposed on him by his contract, or impair materially his chance of obtaining return performance. A right to damages for breach of the whole contract or a right arising out of the assignor’s due performance of his entire obligation can be assigned despite agreement otherwise.
(21/2) The creation, attachment, perfection, or enforcement of a security interest in the seller’s interest under a contract is not a transfer that materially changes the duty of or increases materially the burden or risk imposed on the buyer or impairs materially the buyer’s chance of obtaining return performance within the purview of subsection (2) unless, and then only to the extent that, enforcement actually results in a delegation of material performance of the seller. Even in that event, the creation, attachment, perfection, and enforcement of the security interest remain effective, but (i) the seller is liable to the buyer for damages caused by the delegation to the extent that the damages could not reasonably be prevented by the buyer, and (ii) a court having jurisdiction may grant other appropriate relief, including cancellation of the contract for sale or an injunction against enforcement of the security interest or consummation of the enforcement.
(3) Unless the circumstances indicate the contrary a prohibition of assignment of “the contract” is to be construed as barring only the delegation to the assignee of the assignor’s performance.
(4) An assignment of “the contract” or of “all my rights under the contract” or an assignment in similar general terms is an assignment of rights and unless the language or the circumstances (as in an assignment for security) indicate the contrary, it is a delegation of performance of the duties of the assignor and its acceptance by the assignee constitutes a promise by him to perform those duties. This promise is enforceable by either the assignor or the other party to the original contract.
(5) The other party may treat any assignment which delegates performance as creating reasonable grounds for insecurity and may without prejudice to his rights against the assignor demand assurances from the assignee (section 2-609).
PART 3. GENERAL OBLIGATION AND CONSTRUCTION OF CONTRACT Chapter 106: Section 2-301. General Obligations of Parties Section 2-301. The obligation of the seller is to transfer and deliver and that of the buyer is to accept and pay in accordance with the contract.
PART 3. GENERAL OBLIGATION AND CONSTRUCTION OF CONTRACT Chapter 106: Section 2-302. Unconscionable Contract or Clause Section 2-302. (1) If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.
(2) When it is claimed or appears to the court that the contract or any clause thereof may be unconscionable the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose, and effect to aid the court in making the determination.
PART 3. GENERAL OBLIGATION AND CONSTRUCTION OF CONTRACT Chapter 106: Section 2-303. Allocation or Division of Risks Section 2-303. Where this Article allocates a risk or a burden as between the parties “unless otherwise agreed”, the agreement may not only shift the allocation but may also divide the risk or burden.
PART 3. GENERAL OBLIGATION AND CONSTRUCTION OF CONTRACT Chapter 106: Section 2-304. Price Payable in Money, Goods, Realty, or Otherwise Section 2-304. (1) The price can be made payable in money or otherwise. If it is payable in whole or in part in goods each party is a seller of the goods which he is to transfer.
(2) Even though all or part of the price is payable in an interest in realty the transfer of the goods and the seller’s obligations with reference to them are subject to this Article, but not the transfer of the interest in realty or the transferor’s obligations in connection therewith.
PART 3. GENERAL OBLIGATION AND CONSTRUCTION OF CONTRACT Chapter 106: Section 2-305. Open Price Term Section 2-305. (1) The parties if they so intend can conclude a contract for sale even though the price is not settled. In such a case the price is a reasonable price at the time for delivery if(a) nothing is said as to price; or(b) the price is left to be agreed by the parties and they fail to agree; or(c) the price is to be fixed in terms of some agreed market or other standard as set or recorded by a third person or agency and it is not so set or recorded.
(2) A price to be fixed by the seller or by the buyer means a price for him to fix in good faith.
(3) When a price left to be fixed otherwise than by agreement of the parties fails to be fixed through fault of one party the other may at his option treat the contract as cancelled or himself fix a reasonable price.
(4) Where, however, the parties intend not to be bound unless the price be fixed or agreed and it is not fixed or agreed there is no contract. In such a case the buyer must return any goods already received or if unable so to do must pay their reasonable value at the time of delivery and the seller must return any portion of the price paid on account.
PART 3. GENERAL OBLIGATION AND CONSTRUCTION OF CONTRACT Chapter 106: Section 2-306. Output, Requirements and Exclusive Dealings Section 2-306. (1) A term which measures the quantity by the output of the seller or the requirements of the buyer means such actual output or requirements as may occur in good faith, except that no quantity unreasonably disproportionate to any stated estimate or in the absence of a stated estimate to any normal or otherwise comparable prior output or requirements may be tendered or demanded.
(2) A lawful agreement by either the seller or the buyer for exclusive dealing in the kind of goods concerned imposes unless otherwise agreed an obligation by the seller to use best efforts to supply the goods and by the buyer to use best efforts to promote their sale.
PART 3. GENERAL OBLIGATION AND CONSTRUCTION OF CONTRACT Chapter 106: Section 2-307. Delivery in Single Lot or Several Lots Section 2-307. Unless otherwise agreed all goods called for by a contract for sale must be tendered in a single delivery and payment is due only on such tender but where the circumstances give either party the right to make or demand delivery in lots the price if it can be apportioned may be demanded for each lot.
PART 3. GENERAL OBLIGATION AND CONSTRUCTION OF CONTRACT Chapter 106: Section 2-308. Absence of Specified Place for Delivery Section 2-308. Unless otherwise agreed(a) the place for delivery of goods is the seller’s place of business or if he has none his residence; but(b) in a contract for sale of identified goods which to the knowledge of the parties at the time of contracting are in some other place, that place is the place for their delivery; and(c) documents of title may be delivered through customary banking channels.
PART 3. GENERAL OBLIGATION AND CONSTRUCTION OF CONTRACT Chapter 106: Section 2-309. Absence of Specific Time Provisions; Notice of Termination Section 2-309. (1) The time for shipment or delivery or any other action under a contract if not provided in this Article or agreed upon shall be a reasonable time.
(2) Where the contract provides for successive performances but is indefinite in duration it is valid for a reasonable time but unless otherwise agreed may be terminated at any time by either party.
(3) Termination of a contract by one party except on the happening of an agreed event requires that reasonable notification be received by the other party and an agreement dispensing with notification is invalid if its operation would be unconscionable.
PART 3. GENERAL OBLIGATION AND CONSTRUCTION OF CONTRACT Chapter 106: Section 2-310. Open Time for Payment or Running of Credit; Authority to Ship under Reservation Section 2-310. Unless otherwise agreed(a) payment is due at the time and place at which the buyer is to receive the goods even though the place of shipment is the place of delivery; and(b) if the seller is authorized to send the goods he may ship them under reservation, and may tender the documents of title, but the buyer may inspect the goods after their arrival before payment is due unless such inspection is inconsistent with the terms of the contract (section 2-513); and(c) if delivery is authorized and made by way of documents of title otherwise than by subsection (b) then payment is due at the time and place at which the buyer is to receive the documents regardless of where the goods are to be received; and(d) where the seller is required or authorized to ship the goods on credit the credit period runs from the time of shipment but postdating the invoice or delaying its dispatch will correspondingly delay the starting of the credit period.
PART 3. GENERAL OBLIGATION AND CONSTRUCTION OF CONTRACT Chapter 106: Section 2-311. Options and Co-operation Respecting Performance Section 2-311. (1) An agreement for sale which is otherwise sufficiently definite (subsection (3) of section 2-204) to be a contract is not made invalid by the fact that it leaves particulars of performance to be specified by one of the parties. Any such specification must be made in good faith and within limits set by commercial reasonableness.
(2) Unless otherwise agreed specifications relating to assortment of goods are at the buyer’s option and except as otherwise provided in subsections (1)(c) and (3) of section 2-319 specifications or arrangements relating to shipment are at the seller’s option.
(3) Where such specification would materially affect the other party’s performance but is not seasonably made or where one party’s co-operation is necessary to the agreed performance of the other but is not seasonably forthcoming, the other party in addition to all other remedies(a) is excused for any resulting delay in his own performance, and(b) may also either proceed to perform in any reasonable manner or after the time for a material part of his own performance treat the failure to specify or to co-operate as a breach by failure to deliver or accept the goods.
PART 3. GENERAL OBLIGATION AND CONSTRUCTION OF CONTRACT Chapter 106: Section 2-312. Warranty of Title and Against Infringement; Buyer’s Obligation Against Infringement Section 2-312. (1) Subject to subsection (2) there is in a contract for sale a warranty by the seller that(a) the title conveyed shall be good, and its transfer rightful; and(b) the goods shall be delivered free from any security interest or other lien or encumbrance of which the buyer at the time of contracting has no knowledge.
(2) A warranty under subsection (1) will be excluded or modified only by specific language or by circumstances which give the buyer reason to know that the person selling does not claim title in himself or that he is purporting to sell only such right or title as he or a third person may have.
(3) Unless otherwise agreed a seller who is a merchant regularly dealing in goods of the kind warrants that the goods shall be delivered free of the rightful claim of any third person by way of infringement or the like but a buyer who furnishes specifications to the seller must hold the seller harmless against any such claim which arises out of compliance with the specifications.
(4) Unless otherwise agreed a seller makes no warranty under subsection (3) with respect to any claim for which the exclusive remedy of the claimant is by action against the United States in the Court of Claims or in the district courts of the United States.
PART 3. GENERAL OBLIGATION AND CONSTRUCTION OF CONTRACT Chapter 106: Section 2-313. Express Warranties by Affirmation, Promise, Description, Sample Section 2-313. (1) Express warranties by the seller are created as follows:(a) Any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise.
(b) Any description of the goods which is made part of the basis of the bargain creates an express warranty that the goods shall conform to the description.
(c) Any sample or model which is made part of the basis of the bargain creates an express warranty that the goods shall conform to the sample or model.
(2) It is not necessary to the creation of an express warranty that the seller use formal words such as “warrant” or “guarantee” or that he have a specific intention to make a warranty, but an affirmation merely of the value of the goods or a statement purporting to be merely the seller’s opinion or commendation of the goods does not create a warranty.
PART 3. GENERAL OBLIGATION AND CONSTRUCTION OF CONTRACT Chapter 106: Section 2-314. Implied Warranty: Merchantability; Usage of Trade Section 2-314. (1) Unless excluded or modified by section 2-316, a warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to goods of that kind. Under this section the serving for value of food or drink to be consumed either on the premises or elsewhere is a sale.
(2) Goods to be merchantable must at least be such as(a) pass without objection in the trade under the contract description; and(b) in the case of fungible goods, are of fair average quality within the description; and(c) are fit for the ordinary purposes for which such goods are used; and(d) run, within the variations permitted by the agreement, of even kind, quality and quantity within each unit and among all units involved; and(e) are adequately contained, packaged, and labeled as the agreement may require; and(f) conform to the promises or affirmations of fact made on the container or label if any.
(3) Unless excluded or modified by section 2-316, other implied warranties may arise from course of dealing or usage of trade.
PART 3. GENERAL OBLIGATION AND CONSTRUCTION OF CONTRACT Chapter 106: Section 2-315. Implied Warranty; Fitness for Particular Purpose Section 2-315. Where the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller’s skill or judgment to select or furnish suitable goods, there is unless excluded or modified under the next section an implied warranty that the goods shall be fit for such purpose.
PART 3. GENERAL OBLIGATION AND CONSTRUCTION OF CONTRACT Chapter 106: Section 2-316. Exclusion or Modification of Warranties Section 2-316. (1) Words or conduct relevant to the creation of an express warranty and words or conduct tending to negate or limit warranty shall be construed wherever reasonable as consistent with each other; but subject to the provisions of this Article on parol or extrinsic evidence (section 2-202) negation or limitation is inoperative to the extent that such construction is unreasonable.
(2) Subject to subsection (3), to exclude or modify the implied warranty of merchantability or any part of it the language must mention merchantability and in case of a writing must be conspicuous, and to exclude or modify any implied warranty of fitness the exclusion must be by a writing and conspicuous. Language to exclude all implied warranties of fitness is sufficient if it states, for example, that “There are no warranties which extend beyond the description on the face hereof.
”(3) Notwithstanding subsection (2)(a) unless the circumstances indicate otherwise, all implied warranties are excluded by expressions like “as is”, “with all faults” or other language which in common understanding calls the buyer’s attention to the exclusion of warranties and makes plain that there is no implied warranty; and,(b) when the buyer before entering into the contract has examined the goods or the sample or model as fully as he desired or has refused to examine the goods there is no implied warranty with regard to defects which an examination ought in the circumstances to have revealed to him; and(c) an implied warranty can also be excluded or modified by course of dealing or course of performance or usage of trade.
(4) Remedies for breach of warranty can be limited in accordance with the provisions of this Article on liquidation or limitation of damages and on contractual modification of remedy (sections 2-718 and 2-719).
(5) The implied warranties of merchantability and fitness shall not be applicable to a contract for the sale of human blood, blood plasma or other human tissue or organs from a blood bank or reservoir of such other tissues or organs. Such blood, blood plasma or tissue or organs shall not for the purposes of this Article be considered commodities subject to sale or barter, but shall be considered as medical services.
PART 3. GENERAL OBLIGATION AND CONSTRUCTION OF CONTRACT Chapter 106: Section 2-316A. Limitation on Exclusion or Modification of Warranties Section 2-316A. (1) The provisions of section 2-316 shall not apply to the extent provided in this section.
(2) Any language, oral or written, used by a seller or manufacturer of consumer goods and services, which attempts to exclude or modify any implied warranties of merchantability and fitness for a particular purpose or to exclude or modify the consumer’s remedies for breach of those warranties, shall be unenforceable.
(3) Any language, oral or written, used by a manufacturer of consumer goods, which attempts to limit or modify a consumer’s remedies for breach of such manufacturer’s express warranties, shall be unenforceable, unless such manufacturer maintains facilities within the commonwealth sufficient to provide reasonable and expeditious performance of the warranty obligations.
(4) Any language, oral or written, used by a seller or manufacturer of goods and services, which attempts to exclude or modify any implied warranties of merchantability and fitness for a particular purpose or to exclude or modify remedies for breach of those warranties, shall be unenforceable with respect to injury to the person. This subsection does not affect the validity under other law of an agreement between a seller or manufacturer of goods and services and a buyer that is an organization (see Section 1-201(28)), allocating, as between them, the risk of damages from or providing indemnity for breaches of those warranties with respect to injury to the person.
(5) The provisions of this section may not be disclaimed or waived by agreement.
PART 3. GENERAL OBLIGATION AND CONSTRUCTION OF CONTRACT Chapter 106: Section 2-317. Cumulation and Conflict of Warranties Express or Implied Section 2-317. Warranties whether express or implied shall be construed as consistent with each other and as cumulative, but if such construction is unreasonable the intention of the parties shall determine which warranty is dominant. In ascertaining that intention the following rules apply:(a) Exact or technical specifications displace an inconsistent sample or model or general language of description.
(b) A sample from an existing bulk displaces inconsistent general language of description.
(c) Express warranties displace inconsistent implied warranties other than an implied warranty of fitness for a particular purpose.
PART 3. GENERAL OBLIGATION AND CONSTRUCTION OF CONTRACT Chapter 106: Section 2-318. Lack of Privity in Actions Against a Manufacturer, Seller, Lessor or Supplier of Goods Section 2-318. Lack of privity between plaintiff and defendant shall be no defense in any action brought against the manufacturer, seller, lessor or supplier of goods to recover damages for breach of warranty, express or implied, or for negligence, although the plaintiff did not purchase the goods from the defendant if the plaintiff was a person whom the manufacturer, seller, lessor or supplier might reasonably have expected to use, consume or be affected by the goods. The manufacturer, seller, lessor or supplier may not exclude or limit the operation of this section. Failure to give notice shall not bar recovery under this section unless the defendant proves that he was prejudiced thereby. All actions under this section shall be commenced within three years next after the date the injury and damage occurs.
PART 3. GENERAL OBLIGATION AND CONSTRUCTION OF CONTRACT Chapter 106: Section 2-319. F.
O.
B. and F.
A.
S. Terms Section 2-319. (1) Unless otherwise agreed the term F.
O.
B (which means “free on board”) at a named place, even though used only in connection with the stated price, is a delivery term under which(a) when the term is F.
O.
B. the place of shipment, the seller must at that place ship the goods in the manner provided in this Article (section 2-504) and bear the expense and risk of putting them into the possession of the carrier; or(b) when the term is F.
O.
B. the place of destination, the seller must at his own expense and risk transport the goods to that place and there tender delivery of them in the manner provided in this Article (section 2-503);(c) when under either (a) or (b) the term is also F.
O.
B. vessel, car or other vehicle, the seller must in addition at his own expense and risk load the goods on board. If the term is F.
O.
B. vessel the buyer must name the vessel and in an appropriate case the seller must comply with the provisions of this Article on the form of bill of lading (section 2-323).
(2) Unless otherwise agreed the term F.
A.
S. vessel (which means “free alongside”) at a named port, even though used only in connection with the stated price, is a delivery term under which the seller must(a) at his own expense and risk deliver the goods alongside the vessel in the manner usual in that port or on a dock designated and provided by the buyer; and(b) obtain and tender a receipt for the goods in exchange for which the carrier is under a duty to issue a bill of lading.
(3) Unless otherwise agreed in any case falling within subsection (1)(a) or (c) or subsection (2) the buyer must seasonably give any needed instructions for making delivery, including when the term is F.
A.
S. or F.
O.
B. the loading berth of the vessel and in an appropriate case its name and sailing date. The seller may treat the failure of needed instructions as a failure of co-operation under this Article (section 2-311). He may also at his option move the goods in any reasonable manner preparatory to delivery or shipment.
(4) Under the term F.
O.
B. vessel or F.
A.
S. unless otherwise agreed the buyer must make payment against tender of the required documents and the seller may not tender nor the buyer demand delivery of the goods in substitution for the documents.
PART 3. GENERAL OBLIGATION AND CONSTRUCTION OF CONTRACT Chapter 106: Section 2-320. C.
I.
F. and C. & F. Terms Section 2-320. (1) The term C.
I.
F. means that the price includes in a lump sum the cost of the goods and the insurance and freight to the named destination. The term C. & F. or C.
F. means that the price so includes cost and freight to the named destination.
(2) Unless otherwise agreed and even though used only in connection with the stated price and destination, the term C.
I.
F. destination or its equivalent requires the seller at his own expense and risk to(a) put the goods into the possession of a carrier at the port for shipment and obtain a negotiable bill or bills of lading covering the entire transportation to the named destination; and(b) load the goods and obtain a receipt from the carrier (which may be contained in the bill of lading) showing that the freight has been paid or provided for; and(c) obtain a policy or certificate of insurance, including any war risk insurance, of a kind and on terms then current at the port of shipment in the usual amount, in the currency of the contract, shown to cover the same goods covered by the bill of lading and providing for payment of loss to the order of the buyer or for the account of whom it may concern; but the seller may add to the price the amount of the premium for any such war risk insurance; and(d) prepare an invoice of the goods and procure any other documents required to effect shipment or to comply with the contract; and(e) forward and tender with commercial promptness all the documents in due form and with any indorsement necessary to perfect the buyer’s rights.
(3) Unless otherwise agreed the term C. & F. or its equivalent has the same effect and imposes upon the seller the same obligations and risks as a C.
I.
F. term except the obligation as to insurance.
(4) Under the term C.
I.
F. or C. & F. unless otherwise agreed the buyer must make payment against tender of the required documents and the seller may not tender nor the buyer demand delivery of the goods in substitution for the documents.
PART 3. GENERAL OBLIGATION AND CONSTRUCTION OF CONTRACT Chapter 106: Section 2-321. C.
I.
F. or C. & F.
: “Net Landed Weights”; “Payment on Arrival”; Warranty of Condition on Arrival Section 2-321. Under a contract containing a term C.
I.
F. or C. & F.
(1) Where the price is based on or is to be adjusted according to “net landed weights”, “delivered weights”, “out turn” quantity or quality or the like, unless otherwise agreed the seller must reasonably estimate the price. The payment due on tender of the documents called for by the contract is the amount so estimated, but after final adjustment of the price a settlement must be made with commercial promptness.
(2) An agreement described in subsection (1) or any warranty of quality or condition of the goods on arrival places upon the seller the risk of ordinary deterioration, shrinkage and the like in transportation but has no effect on the place or time of identification to the contract for sale or delivery or on the passing of the risk of loss.
(3) Unless otherwise agreed where the contract provides for payment on or after arrival of the goods the seller must before payment allow such preliminary inspection as is feasible; but if the goods are lost delivery of the documents and payment are due when the goods should have arrived.
PART 3. GENERAL OBLIGATION AND CONSTRUCTION OF CONTRACT Chapter 106: Section 2-322. Delivery “Ex-Ship” Section 2-322. (1) Unless otherwise agreed a term for delivery of goods “ex-ship” (which means from the carrying vessel) or in equivalent language is not restricted to a particular ship and requires delivery from a ship which has reached a place at the named port of destination where goods of the kind are usually discharged.
(2) Under such a term unless otherwise agreed(a) the seller must discharge all liens arising out of the carriage and furnish the buyer with direction which puts the carrier under a duty to deliver the goods; and(b) the risk of loss does not pass to the buyer until the goods leave the ship’s tackle or are otherwise properly unloaded.
PART 3. GENERAL OBLIGATION AND CONSTRUCTION OF CONTRACT Chapter 106: Section 2-323. Form of Bill of Lading required in Overseas Shipment; “Overseas” Section 2-323. (1) Where the contract contemplates overseas shipment and contains a term C.
I.
F. or C. & F. or F.
O.
B. vessel, the seller unless otherwise agreed must obtain a negotiable bill of lading stating that the goods have been loaded on board or, in the case of a term C.
I.
F. or C. & F.
, received for shipment.
(2) Where in a case within subsection (1) a bill of lading has been issued in a set of parts, unless otherwise agreed if the documents are not to be sent from abroad the buyer may demand tender of the full set; otherwise only one part of the bill of lading need be tendered. Even if the agreement expressly requires a full set(a) due tender of a single part is acceptable within the provisions of this Article on cure of improper delivery (subsection (1) of section 2-508); and(b) even though the full set is demanded, if the documents are sent from abroad the person tendering an incomplete set may nevertheless require payments upon furnishing an indemnity which the buyer in good faith deems adequate.
(3) A shipment by water or by air or a contract contemplating such shipment is “overseas” in so far as by usage of trade or agreement it is subject to the commercial, financing or shipping practices characteristic of international deep water commerce.
PART 3. GENERAL OBLIGATION AND CONSTRUCTION OF CONTRACT Chapter 106: Section 2-324. “No Arrival, No Sale” Term Section 2-324. Under a term “no arrival, no sale” or terms of like meaning, unless otherwise agreed,(a) the seller must properly ship conforming goods, and if they arrive by any means he must tender them on arrival but he assumes no obligation that the goods will arrive unless he has caused the non-arrival; and(b) where without fault of the seller the goods are in part lost or have so deteriorated as no longer to conform to the contract or arrive after the contract time, the buyer may proceed as if there had been casualty to identified goods (section 2-613).
PART 3. GENERAL OBLIGATION AND CONSTRUCTION OF CONTRACT Chapter 106: Section 2-325. “Letter of Credit” Term; “Confirmed Credit” Section 2-325. (1) Failure of the buyer seasonably to furnish an agreed letter of credit is a breach of the contract for sale.
(2) The delivery to seller of a proper letter of credit suspends the buyer’s obligation to pay. If the letter of credit is dishonored, the seller may on seasonable notification to the buyer require payment directly from him.
(3) Unless otherwise agreed the term “letter of credit” or “banker’s credit” in a contract for sale means an irrevocable credit issued by a financing agency of good repute and, where the shipment is overseas, of good international repute. The term “confirmed credit” means that the credit must also carry the direct obligation of such an agency which does business in the seller’s financial market.
PART 3. GENERAL OBLIGATION AND CONSTRUCTION OF CONTRACT Chapter 106: Section 2-326. Sale on Approval and Sale or Return; Rights of Creditors Section 2-326. (1) Unless otherwise agreed, if delivered goods may be returned by the buyer even though they conform to the contract, the transaction is(a) a “sale on approval” if the goods are delivered primarily for use, and(b) a “sale or return” if the goods are delivered primarily for resale.
(2) Goods held on approval are not subject to the claims of the buyer’s creditors until acceptance; goods held on sale or return are subject to such claims while in the buyer’s possession.
(3) Any “or return” term of a contract for sale is to be treated as a separate contract for sale within the statute of frauds section of this Article (Section 2-201) and as contradicting the sale aspect of the contract within the provisions of this Article on parole or extrinsic evidence (Section 2-202).
PART 3. GENERAL OBLIGATION AND CONSTRUCTION OF CONTRACT Chapter 106: Section 2-327. Special Incidents of Sale on Approval and Sale or Return Section 2-327. (1) Under a sale on approval unless otherwise agreed(a) although the goods are identified to the contract the risk of loss and the title do not pass to the buyer until acceptance; and(b) use of the goods consistent with the purpose of trial is not acceptance but failure seasonably to notify the seller of election to return the goods is acceptance, and if the goods conform to the contract acceptance of any part is acceptance of the whole; and(c) after due notification of election to return, the return is at the seller’s risk and expense but a merchant buyer must follow any reasonable instructions.
(2) Under a sale or return unless otherwise agreed(a) the option to return extends to the whole or any commercial unit of the goods while in substantially their original condition, but must be exercised seasonably; and(b) the return is at the buyer’s risk and expense.
PART 3. GENERAL OBLIGATION AND CONSTRUCTION OF CONTRACT Chapter 106: Section 2-328. Sale by Auction Section 2-328. (1) In a sale by auction if goods are put up in lots each lot is the subject of a separate sale.
(2) A sale by auction is complete when the auctioneer so announces by the fall of the hammer or in other customary manner. Where a bid is made while the hammer is falling in acceptance of a prior bid the auctioneer may in his discretion reopen the bidding or declare the goods sold under the bid on which the hammer was falling.
(3) Such a sale is with reserve unless the goods are in explicit terms put up without reserve. In an auction with reserve the auctioneer may withdraw the goods at any time until he announces completion of the sale. In an auction without reserve, after the auctioneer calls for bids on an article or lot, that article or lot cannot be withdrawn unless no bid is made within a reasonable time. In either case a bidder may retract his bid until the auctioneer’s announcement of completion of the sale, but a bidder’s retraction does not revive any previous bid.
(4) If the auctioneer knowingly receives a bid on the seller’s behalf or the seller makes or procures such a bid, and notice has not been given that liberty for such bidding is reserved, the buyer may at his option avoid the sale or take the goods at the price of the last good faith bid prior to the completion of the sale. This subsection shall not apply to any bid at a forced sale.
PART 4. TITLE, CREDITORS AND GOOD FAITH PURCHASERS Chapter 106: Section 2-401. Passing of Title; Reservation for Security; Limited Application of this Section Section 2-401. Each provision of this Article with regard to the rights, obligations and remedies of the seller, the buyer, purchasers or other third parties applies irrespective of title to the goods except where the provision refers to such title. In so far as situations are not covered by the other provisions of this Article and matters concerning title become material the following rules apply:(1) Title to goods cannot pass under a contract for sale prior to their identification to the contract (section 2-501), and unless otherwise explicitly agreed the buyer acquires by their identification a special property as limited by this chapter. Any retention or reservation by the seller of the title (property) in goods shipped or delivered to the buyer is limited in effect to a reservation of a security interest. Subject to these provisions and to the provisions of the Article on Secured Transactions (Article 9), title to goods passes from the seller to the buyer in any manner and on any conditions explicitly agreed on by the parties.
(2) Unless otherwise explicitly agreed title passes to the buyer at the time and place at which the seller completes his performance with reference to the physical delivery of the goods, despite any reservation of a security interest and even though a document of title is to be delivered at a different time or place; and in particular despite any reservation of a security interest by the bill of lading(a) if the contract requires or authorizes the seller to send the goods to the buyer but does not require him to deliver them at destination, title passes to the buyer at the time and place of shipment; but(b) if the contract requires delivery at destination, title passes on tender there.
(3) Unless otherwise explicitly agreed where delivery is to be made without moving the goods(a) if the seller is to deliver a document of title, title passes at the time when and the place where he delivers such documents; or(b) if the goods are at the time of contracting already identified and no documents are to be delivered, title passes at the time and place of contracting.
(4) A rejection or other refusal by the buyer to receive or retain the goods, whether or not justified, or a justified revocation of acceptance revests title to the goods in the seller. Such revesting occurs by operation of law and is not a “sale”.
PART 4. TITLE, CREDITORS AND GOOD FAITH PURCHASERS Chapter 106: Section 2-402. Rights of Seller’s Creditors against Sold Goods Section 2-402. (1) Except as provided in subsections (2) and (3), rights of unsecured creditors of the seller with respect to goods which have been identified to a contract for sale are subject to the buyer’s rights to recover the goods under this Article (sections 2-502 and 2-716).
(2) A creditor of the seller may treat a sale or an identification of goods to a contract for sale as void if as against him a retention of possession by the seller is fraudulent under any rule of law of the state where the goods are situated, except that retention of possession in good faith and current course of trade by a merchant-seller for a commercially reasonable time after a sale or identification is not fraudulent.
(3) Nothing in this Article shall be deemed to impair the rights or creditors of the seller(a) under the provisions of the Article on Secured Transactions (Article 9); or(b) where identification to the contract or delivery is made not in current course of trade but in satisfaction of or as security for a pre-existing claim for money, security or the like and is made under circumstances which under any rule of law of the state where the goods are situated would apart from this Article constitute the transaction a fraudulent conveyance or voidable preference.
PART 4. TITLE, CREDITORS AND GOOD FAITH PURCHASERS Chapter 106: Section 2-403. Power to Transfer; Good Faith Purchase of Goods; “Entrusting” Section 2-403. (1) A purchaser of goods acquires all title which his transferor had or had power to transfer except that a purchaser of a limited interest acquires rights only to the extent of the interest purchased. A person with voidable title has power to transfer a good title to a good faith purchaser for value. When goods have been delivered under a transaction of purchase the purchaser has such power even though(a) the transferor was deceived as to the identity of the purchaser; or(b) the delivery was in exchange for a check which is later dishonored; or(c) it was agreed that the transaction was to be a “cash sale”; or(d) the delivery was procured through fraud punishable as larcenous under the criminal law.
(2) Any entrusting of possession of goods to a merchant who deals in goods of that kind gives him power to transfer all rights of the entruster to a buyer in ordinary course of business.
(3) “Entrusting” includes any delivery and any acquiescence in retention of possession regardless of any condition expressed between the parties to the delivery or acquiescence and regardless of whether the procurement of the entrusting or the possessor’s disposition of the goods have been such as to be larcenous under the criminal law.
(4) The rights of other purchasers of goods and of lien creditors are governed by the Articles on Secured Transactions (Article 9) and Documents of Title (Article 7).
PART 5. PERFORMANCE Chapter 106: Section 2-501. Insurable Interest in Goods; Manner of Identification of Goods Section 2-501. (1) The buyer obtains a special property and an insurable interest in goods by identification of existing goods as goods to which the contract refers even though the goods so identified are nonconforming and he has an option to return or reject them. Such identification can be made at any time and in any manner explicitly agreed to by the parties. In the absence of explicit agreement identification occurs(a) when the contract is made if it is for the sale of goods already existing and identified;(b) if the contract is for the sale of future goods other than those described in paragraph (c), when goods are shipped, marked or otherwise designated by the seller as goods to which the contract refers;(c) when the crops are planted or otherwise become growing crops or the young are conceived if the contract is for the sale of unborn young to be born within twelve months after contracting or for the sale of crops to be harvested within twelve months or the next normal harvest season after contracting whichever is longer.
(2) The seller retains an insurable interest in goods so long as title to or any security interest in the goods remains in him and where the identification is by the seller alone he may until default or insolvency or notification to the buyer that the identification is final substitute other goods for those identified.
(3) Nothing in this section impairs any insurable interest recognized under any other statute or rule of law.
PART 5. PERFORMANCE Chapter 106: Section 2-502. Buyer’s Right to Goods on Seller’s Repudiation, Failure to Deliver, or Insolvency Section 2-502. (1) Subject to subsections (2) and (3) and even though the goods have not been shipped a buyer who has paid a part or all of the price of goods in which he has a special property under the provisions of the immediately preceding section may on making and keeping good a tender of any unpaid portion of their price recover them from the seller if:(a) in the case of goods bought for personal, family, or household purposes, the seller repudiates or fails to deliver as required by the contract; or(b) in all cases, the seller becomes insolvent within 10 days after receipt of the first installment on their price.
(2) The buyer’s right to recover the goods under subsection (1)(a) vests upon acquisition of a special property, even if the seller had not then repudiated or failed to deliver.
(3) If the identification creating his special property has been made by the buyer he acquires the right to recover the goods only if they conform to the contract for sale.
PART 5. PERFORMANCE Chapter 106: Section 2-503. Manner of Seller’s Tender of Delivery Section 2-503. (1) Tender of delivery requires that the seller put and hold conforming goods at the buyer’s disposition and give the buyer any notification reasonably necessary to enable him to take delivery. The manner, time and place for tender are determined by the agreement and this Article, and in particular(a) tender must be at a reasonable hour, and if it is of goods they must be kept available for the period reasonably necessary to enable the buyer to take possession; but(b) unless otherwise agreed the buyer must furnish facilities reasonably suited to the receipt of the goods.
(2) Where the case is within the next section respecting shipment tender requires that the seller comply with its provisions.
(3) Where the seller is required to deliver at a particular destination tender requires that he comply with subsection (1) and also in any appropriate case tender documents as described in subsections (4) and (5) of this section.
(4) Where goods are in the possession of a bailee and are to be delivered without being moved(a) tender requires that the seller either tender a negotiable document of title covering such goods or procure acknowledgment by the bailee of the buyer’s right to possession of the goods; but(b) tender to the buyer of a non-negotiable document of title or of a written direction to the bailee to deliver is sufficient tender unless the buyer seasonably objects, and receipt by the bailee of notification of the buyer’s rights fixes those rights as against the bailee and all third persons; but risk of loss of the goods and of any failure by the bailee to honor the non-negotiable document of title or to obey the direction remains on the seller until the buyer has had a reasonable time to present the document or direction, and a refusal by the bailee to honor the document or to obey the direction defeats the tender.
(5) Where the contract requires the seller to deliver documents(a) he must tender all such documents in correct form, except as provided in this Article with respect to bills of lading in a set (subsection (2) of section 2-323); and(b) tender through customary banking channels is sufficient and dishonor of a draft accompanying the documents constitutes non-acceptance or rejection.
PART 5. PERFORMANCE Chapter 106: Section 2-504. Shipment by Seller Section 2-504. Where the seller is required or authorized to send the goods to the buyer and the contract does not require him to deliver them at a particular destination, then unless otherwise agreed he must(a) put the goods in the possession of such a carrier and make such a contract for their transportation as may be reasonable having regard to the nature of the goods and other circumstances of the case; and(b) obtain and promptly deliver or tender in due form any document necessary to enable the buyer to obtain possession of the goods or otherwise required by the agreement or by usage of trade; and(c) promptly notify the buyer of the shipment.
Failure to notify the buyer under paragraph (c) or to make a proper contract under paragraph (a) is a ground for rejection only if material delay or loss ensues.
PART 5. PERFORMANCE Chapter 106: Section 2-505. Seller’s Shipment under Reservation Section 2-505. (1) Where the seller has identified goods to the contract by or before shipment(a) his procurement of a negotiable bill of lading to his own order or otherwise reserves in him a security interest in the goods. His procurement of the bill to the order of a financing agency or of the buyer indicates in addition only the seller’s expectation of transferring that interest to the person named.
(b) a non-negotiable bill of lading to himself or his nominee reserves possession of the goods as security, but except in a case of conditional delivery (subsection (2) of section 2-507) a non-negotiable bill of lading naming the buyer as consignee reserves no security interest even though the seller retains possession of the bill of lading.
(2) When shipment by the seller with reservation of a security interest is in violation of the contract for sale it constitutes an improper contract for transportation within the preceding section but impairs neither the rights given to the buyer by shipment and identification of the goods to the contract nor the seller’s powers as a holder of a negotiable document.
PART 5. PERFORMANCE Chapter 106: Section 2-506. Rights of Financing Agency Section 2-506. (1) A financing agency by paying or purchasing for value a draft which relates to a shipment of goods acquires to the extent of the payment or purchase and in addition to its own rights under the draft and any document of title securing it any rights of the shipper in the goods including the right to stop delivery and the shipper’s right to have the draft honored by the buyer.
(2) The right to reimbursement of a financing agency which has in good faith honored or purchased the draft under commitment to or authority from the buyer is not impaired by subsequent discovery of defects with reference to any relevant document which was apparently regular on its face.
PART 5. PERFORMANCE Chapter 106: Section 2-507. Effect of Seller’s Tender; Delivery on Condition Section 2-507. (1) Tender of delivery is a condition to the buyer’s duty to accept the goods and, unless otherwise agreed, to his duty to pay for them. Tender entitles the seller to acceptance of the goods and to payment according to the contract.
(2) Where payment is due and demanded on the delivery to the buyer of goods or documents of title, his right as against the seller to retain or dispose of them is conditional upon his making the payment due.
PART 5. PERFORMANCE Chapter 106: Section 2-508. Cure by Seller of Improper Tender or Delivery; Replacement Section 2-508. (1) Where any tender or delivery by the seller is rejected because non-conforming and the time for performance has not yet expired, the seller may seasonably notify the buyer of his intention to cure and may then within the contract time make a conforming delivery.
(2) Where the buyer rejects a non-conforming tender which the seller had reasonable grounds to believe would be acceptable with or without money allowance the seller may if he seasonably notifies the buyer have a further reasonable time to substitute a conforming tender.
PART 5. PERFORMANCE Chapter 106: Section 2-509. Risk of Loss in the Absence of Breach Section 2-509. (1) Where the contract requires or authorizes the seller to ship the goods by carrier(a) if it does not require him to deliver them at a particular destination, the risk of loss passes to the buyer when the goods are duly delivered to the carrier even though the shipment is under reservation (section 2-505); but(b) if it does require him to deliver them at a particular destination and the goods are there duly tendered while in the possession of the carrier, the risk of loss passes to the buyer when the goods are there duly so tendered as to enable the buyer to take delivery.
(2) Where the goods are held by a bailee to be delivered without being moved, the risk of loss passes to the buyer(a) on his receipt of a negotiable document of title covering the goods; or(b) on acknowledgment by the bailee of the buyer’s right to possession of the goods; or(c) after his receipt of a non-negotiable document of title or other written direction to deliver, as provided in subsection (4)(b) of section 2-503.
(3) In any case not within subsection (1) or (2), the risk of loss passes to the buyer on his receipt of the goods if the seller is a merchant; otherwise the risk passes to the buyer on tender of delivery.
(4) The provisions of this section are subject to contrary agreement of the parties and to the provisions of this Article on sale on approval (section 2-327) and on effect of breach on risk of loss (section 2-510).
PART 5. PERFORMANCE Chapter 106: Section 2-510. Effect of Breach on Risk of Loss Section 2-510. (1) Where a tender or delivery so fails to conform to the contract as to give a right of rejection the risk of loss remains on the seller until cure or acceptance.
(2) Where the buyer rightfully revokes acceptance he may to the extent of any deficiency in his effective insurance coverage treat the risk of loss as having rested on the seller from the beginning.
(3) Where the buyer as to conforming goods already identified to the contract for sale repudiates or is otherwise in breach before risk of their loss has passed to him, the seller may to the extent of any deficiency in his effective insurance coverage treat the risk of loss as resting on the buyer for a commercially reasonable time.
PART 5. PERFORMANCE Chapter 106: Section 2-511. Tender of Payment by Buyer; Payment by Check Section 2-511. (1) Unless otherwise agreed tender of payment is a condition to the seller’s duty to tender and complete any delivery.
(2) Tender of payment is sufficient when made by any means or in any manner current in the ordinary course of business unless the seller demands payment in legal tender and gives any extension of time reasonable necessary to procure it.
(3) Subject to the provisions of this chapter on the effect of an instrument on an obligation (Section 3-310), payment by check is conditional and is defeated as between the parties by dishonor of the check on due presentment.
PART 5. PERFORMANCE Chapter 106: Section 2-512. Payment by Buyer before Inspection Section 2-512. (1) Where the contract requires payment before inspection non-conformity of the goods does not excuse the buyer from so making payment unless(a) the non-conformity appears without inspection; or(b) despite tender of the required documents the circumstances would justify injunction against honor under the provisions of subsection (b) of section 5-109.
(2) Payment pursuant to subsection (1) does not constitute an acceptance of the goods or impair the buyer’s right to inspect or any of his remedies.
PART 5. PERFORMANCE Chapter 106: Section 2-513. Buyer’s Right to Inspection of Goods Section 2-513. (1) Unless otherwise agreed and subject to subsection (3), where goods are tendered or delivered or identified to the contract for sale, the buyer has a right before payment or acceptance to inspect them at any reasonable place and time and in any reasonable manner. When the seller is required or authorized to send the goods to the buyer, the inspection may be after their arrival.
(2) Expenses of inspection must be borne by the buyer but may be recovered from the seller if the goods do not conform and are rejected.
(3) Unless otherwise agreed and subject to the provisions of this Article on C.
I.
F. contracts (subsection (3) of section 2-321), the buyer is not entitled to inspect the goods before payment of the price when the contract provides(a) for delivery “C.
O.
D.
” or on other like terms; or(b) for payment against documents of title, except where such payment is due only after the goods are to become available for inspection.
(4) A place or method of inspection fixed by the parties is presumed to be exclusive but unless otherwise expressly agreed it does not postpone identification or shift the place for delivery or for passing the risk of loss. If compliance becomes impossible, inspection shall be as provided in this section unless the place or method fixed was clearly intended as an indispensable condition failure of which avoids the contract.
PART 5. PERFORMANCE Chapter 106: Section 2-514. When Documents Deliverable on Acceptance; When on Payment Section 2-514. Unless otherwise agreed documents against which a draft is drawn are to be delivered to the drawee on acceptance of the draft if it is payable more than three days after presentment; otherwise only on payment.
PART 5. PERFORMANCE Chapter 106: Section 2-515. Preserving Evidence of Goods in Dispute Section 2-515. In furtherance of the adjustment of any claim or dispute(a) either party on reasonable notification to the other and for the purpose of ascertaining the facts and preserving evidence has the right to inspect, test and sample the goods including such of them as may be in the possession or control of the other; and(b) the parties may agree to a third party inspection or survey to determine the conformity or condition of the goods and may agree that the findings shall be binding upon them in any subsequent litigation or adjustment.
PART 6. BREACH, REPUDIATION AND EXCUSE Chapter 106: Section 2-601. Buyer’s Rights on Improper Delivery Section 2-601. Subject to the provisions of this Article on breach in installment contracts (section 2-612) and unless otherwise agreed under the sections on contractual limitation of remedy (sections 2-718 and 2-719), if the goods or the tender of delivery fail in any respect to conform to the contract, the buyer may(a) reject the whole; or(b) accept the whole; or(c) accept any commercial unit or units and reject the rest.
PART 6. BREACH, REPUDIATION AND EXCUSE Chapter 106: Section 2-602. Manner and Effect of Rightful Rejection Section 2-602. (1) Rejection of goods must be within a reasonable time after their delivery or tender. It is ineffective unless the buyer seasonably notifies the seller.
(2) Subject to the provisions of the two following sections on rejected goods (section 2-603 and 2-604)(a) after rejection any exercise of ownership by the buyer with respect to any commercial unit is wrongful as against the seller; and(b) if the buyer has before rejection taken physical possession of goods in which he does not have a security interest under the provisions of this Article (subsection (3) of section 2-711), he is under a duty after rejection to hold them with reasonable care at the seller’s disposition for a time sufficient to permit the seller to remove them; but(c) the buyer has no further obligations with regard to goods rightfully rejected.
(3) The seller’s rights with respect to goods wrongfully rejected are governed by the provisions of this Article on seller’s remedies in general (section 2-703).
PART 6. BREACH, REPUDIATION AND EXCUSE Chapter 106: Section 2-603. Merchant Buyer’s Duties as to Rightfully Rejected Goods Section 2-603. (1) Subject to any security interest in the buyer (subsection (3) of section 2-711), when the seller has no agent or place of business at the market of rejection a merchant buyer is under a duty after rejection of goods in his possession or control to follow any reasonable instructions received from the seller with respect to the goods and in the absence of such instructions to make reasonable efforts to sell them for the seller’s account if they are perishable or threaten to decline in value speedily. Instructions are not reasonable if on demand indemnity for expenses is not forthcoming.
(2) When the buyer sells goods under subsection (1), he is entitled to reimbursement from the seller or out of the proceeds for reasonable expenses of caring for and selling them, and if the expenses include no selling commission then to such commission as is usual in the trade or if there is none to a reasonable sum not exceeding ten per cent on the gross proceeds.
(3) In complying with this section the buyer is held only to good faith and good faith conduct hereunder is neither acceptance nor conversion nor the basis of an action for damages.
PART 6. BREACH, REPUDIATION AND EXCUSE Chapter 106: Section 2-604. Buyer’s Options as to Salvage of Rightfully Rejected Goods Section 2-604. Subject to the provisions of the immediately preceding section on perishables if the seller gives no instructions within a reasonable time after notification of rejection the buyer may store the rejected goods for the seller’s account or reship them to him or resell them for the seller’s account with reimbursement as provided in the preceding section. Such action is not acceptance or conversion.
PART 6. BREACH, REPUDIATION AND EXCUSE Chapter 106: Section 2-605. Waiver of Buyer’s Objections by Failure to Particularize Section 2-605. (1) The buyer’s failure to state in connection with rejection a particular defect which is ascertainable by reasonable inspection precludes him from relying on the unstated defect to justify rejection or to establish breach(a) where the seller could have cured it if stated seasonably; or(b) between merchants when the seller has after rejection made a request in writing for a full and final written statement of all defects on which the buyer proposes to rely.
(2) Payment against documents made without reservation of rights precludes recovery of the payment for defects apparent on the face of the documents.
PART 6. BREACH, REPUDIATION AND EXCUSE Chapter 106: Section 2-606. What Constitutes Acceptance of Goods Section 2-606. (1) Acceptance of goods occurs when the buyer(a) after a reasonable opportunity to inspect the goods signifies to the seller that the goods are conforming or that he will take or retain them in spite of their non-conformity; or(b) fails to make an effective rejection (subsection (1) of section 2-602), but such acceptance does not occur until the buyer has had a reasonable opportunity to inspect them; or(c) does any act inconsistent with the seller’s ownership; but if such act is wrongful as against the seller it is an acceptance only if ratified by him.
(2) Acceptance of a part of any commercial unit is acceptance of that entire unit.
PART 6. BREACH, REPUDIATION AND EXCUSE Chapter 106: Section 2-607. Effect of Acceptance; Notice of Breach; Burden of Establishing Breach after Acceptance; Notice of Claim or Litigation to Person Answerable Over Section 2-607. (1) The buyer must pay at the contract rate for any goods accepted.
(2) Acceptance of goods by the buyer precludes rejection of the goods accepted and if made with knowledge of a non-conformity cannot be revoked because of it unless the acceptance was on the reasonable assumption that the non-conformity would be seasonably cured but acceptance does not of itself impair any other remedy provided by this Article for non-conformity.
(3) Where a tender has been accepted(a) the buyer must within a reasonable time after he discovers or should have discovered any breach notify the seller of breach or be barred from any remedy; and(b) if the claim is one for infringement or the like (subsection (3) of section 2-312) and the buyer is sued as a result of such a breach he must so notify the seller within a reasonable time after he receives notice of the litigation or be barred from any remedy over for liability established by the litigation.
(4) The burden is on the buyer to establish any breach with respect to the goods accepted.
(5) Where the buyer is sued for breach of a warranty or other obligation for which his seller is answerable over(a) he may give his seller written notice of the litigation. If the notice states that the seller may come in and defend and that if the seller does not do so he will be bound in any action against him by his buyer by any determination of fact common to the two litigations, then unless the seller after seasonable receipt of the notice does come in and defend he is so bound;(b) if the claim is one for infringement or the like (subsection (3) of section 2-312) the original seller may demand in writing that his buyer turn over to him control of the litigation including settlement or else be barred from any remedy over and if he also agrees to bear all expense and to satisfy any adverse judgment, then unless the buyer after seasonable receipt of the demand does turn over control the buyer is so barred.
(6) The provisions of subsections (3), (4) and (5) apply to any obligation of a buyer to hold the seller harmless against infringement or the like (subsection (3) of section 2-312).
PART 6. BREACH, REPUDIATION AND EXCUSE Chapter 106: Section 2-608. Revocation of Acceptance in Whole or in Part Section 2-608. (1) The buyer may revoke his acceptance of a lot or commercial unit whose non-conformity substantially impairs its value to him if he has accepted it(a) on the reasonable assumption that its non-conformity would be cured and it has not been seasonably cured; or(b) without discovery of such non-conformity if his acceptance was reasonably induced either by the difficulty of discovery before acceptance or by the seller’s assurances.
(2) Revocation of acceptance must occur within a reasonable time after the buyer discovers or should have discovered the ground for it and before any substantial change in condition of the goods which is not caused by their own defects. It is not effective until the buyer notifies the seller of it.
(3) A buyer who so revokes has the same rights and duties with regard to the goods involved as if he had rejected them.
PART 6. BREACH, REPUDIATION AND EXCUSE Chapter 106: Section 2-609. Right to Adequate Assurance of Performance Section 2-609. (1) A contract for sale imposes an obligation on each party that the other’s expectation of receiving due performance will not be impaired. When reasonable grounds for insecurity arise with respect to the performance of either party the other may in writing demand adequate assurance of due performance and until he receives such assurance may if commercially reasonable suspend any performance for which he has not already received the agreed return.
(2) Between merchants the reasonableness of grounds for insecurity and the adequacy of any assurance offered shall be determined according to commercial standards.
(3) Acceptance of any improper delivery or payment does not prejudice the aggrieved party’s right to demand adequate assurance of future performance.
(4) After receipt of a justified demand failure to provide within a reasonable time not exceeding thirty days such assurance of due performance as is adequate under the circumstances of the particular case is a repudiation of the contract.
PART 6. BREACH, REPUDIATION AND EXCUSE Chapter 106: Section 2-610. Anticipatory Repudiation Section 2-610. When either party repudiates the contract with respect to a performance not yet due the loss of which will substantially impair the value of the contract to the other, the aggrieved party may(a) for a commercially reasonable time await performance by the repudiating party; or(b) resort to any remedy for breach (section 2-703 or section 2-711), even though he has notified the repudiating party that he would await the latter’s performance and has urged retraction; and(c) in either case suspend his own performance or proceed in accordance with the provisions of this Article on the seller’s right to identify goods to the contract notwithstanding breach or to salvage unfinished goods (section 2-704).
PART 6. BREACH, REPUDIATION AND EXCUSE Chapter 106: Section 2-611. Retraction of Anticipatory Repudiation Section 2-611. (1) Until the repudiating party’s next performance is due he can retract his repudiation unless the aggrieved party has since the repudiation cancelled or materially changed his position or otherwise indicated that he considers the repudiation final.
(2) Retraction may be by any method which clearly indicates to the aggrieved party that the repudiating party intends to perform, but must include any assurance justifiably demanded under the provisions of this Article (section 2-609).
(3) Retraction reinstates the repudiating party’s rights under the contract with due excuse and allowance to the aggrieved party for any delay occasioned by the repudiation.
PART 6. BREACH, REPUDIATION AND EXCUSE Chapter 106: Section 2-612. “Installment Contract”; Breach Section 2-612. (1) An “installment contract” is one which requires or authorizes the delivery of goods in separate lots to be separately accepted, even though the contract contains a clause “each delivery is a separate contract” or its equivalent.
(2) The buyer may reject any installment which is non-conforming if the non-conformity substantially impairs the value of that installment and cannot be cured or if the non-conformity is a defect in the required documents; but if the non-conformity does not fall within subsection (3) and the seller gives adequate assurance of its cure the buyer must accept that installment.
(3) Whenever non-conformity or default with respect to one or more installments substantially impairs the value of the whole contract there is a breach of the whole. But the aggrieved party reinstates the contract if he accepts a non-conforming installment without seasonably notifying of cancellation or if he brings an action with respect only to past installments or demands performance as to future installments.
PART 6. BREACH, REPUDIATION AND EXCUSE Chapter 106: Section 2-613. Casualty to Identified Goods Section 2-613. Where the contract requires for its performance goods identified when the contract is made, and the goods suffer casualty without fault of either party before the risk of loss passes to the buyer, or in a proper case under a “no arrival, no sale” term (section 2-324) then(a) if the loss is total the contract is avoided; and(b) if the loss is partial or the goods have so deteriorated as no longer to conform to the contract the buyer may nevertheless demand inspection and at his option either treat the contract as avoided or accept the goods with due allowance from the contract price for the deterioration or deficiency in quantity but without further right against the seller.
PART 6. BREACH, REPUDIATION AND EXCUSE Chapter 106: Section 2-614. Substituted Performance Section 2-614. (1) Where without fault of either party the agreed berthing, loading, or unloading facilities fail or an agreed type of carrier becomes unavailable or the agreed manner of delivery otherwise becomes commercially impracticable but a commercially reasonable substitute is available, such substitute performance must be tendered and accepted.
(2) If the agreed means or manner of payment fails because of domestic or foreign governmental regulation, the seller may withhold or stop delivery unless the buyer provides a means or manner of payment which is commercially a substantial equivalent. If delivery has already been taken, payment by the means or in the manner provided by the regulation discharges the buyer’s obligation unless the regulation is discriminatory, oppressive or predatory.
PART 6. BREACH, REPUDIATION AND EXCUSE Chapter 106: Section 2-615. Excuse by Failure of Presupposed Conditions Section 2-615. Except so far as a seller may have assumed a greater obligation and subject to the preceding section on substituted performance(a) Delay in delivery or non-delivery in whole or in part by a seller who complies with paragraphs (b) and (c) is not a breach of his duty under a contract for sale if performance as agreed has been made impracticable by the occurrence of a contingency the non-occurrence of which was a basic assumption on which the contract was made or by compliance in good faith with any applicable foreign or domestic governmental regulation or order whether or not it later proves to be invalid.
(b) Where the causes mentioned in paragraph (a) affect only a part of the seller’s capacity to perform, he must allocate production and deliveries among his customers but may at his option include regular customers not then under contract as well as his own requirements for further manufacture.
He may so allocate in any manner which is fair and reasonable.
(c) The seller must notify the buyer seasonably that there will be delay or non-delivery and, when allocation is required under paragraph (b), of the estimated quota thus made available for the buyer.
PART 6. BREACH, REPUDIATION AND EXCUSE Chapter 106: Section 2-616. Procedure on Notice Claiming Excuse Section 2-616. (1) Where the buyer receives notification of a material or indefinite delay or an allocation justified under the preceding section he may by written notification to the seller as to any delivery concerned, and where the prospective deficiency substantially impairs the value of the whole contract under the provisions of this Article relating to breach of installment contracts (section 2-612), then also as to the whole(a) terminate and thereby discharge any unexecuted portion of the contract; or(b) modify the contract by agreeing to take his available quota in substitution.
(2) If after receipt of such notification from the seller the buyer fails so to modify the contract within a reasonable time not exceeding thirty days the contract lapses with respect to any deliveries affected.
(3) The provisions of this section may not be negated by agreement except in so far as the seller has assumed a greater obligation under the preceding section.
PART 7. REMEDIES Chapter 106: Section 2-701. Remedies for Breach of Collateral Contracts Not Impaired Section 2-701. Remedies for breach of any obligation or promise collateral or ancillary to a contract for sale are not impaired by the provisions of this Article.
PART 7. REMEDIES Chapter 106: Section 2-702. Seller’s Remedies on Discovery of Buyer’s Insolvency Section 2-702. (1) Where the seller discovers the buyer to be insolvent he may refuse delivery except for cash including payment for all goods theretofore delivered under the contract, and stop delivery under this Article (section 2-705).
(2) Where the seller discovers that the buyer has received goods on credit while insolvent he may reclaim the goods upon demand made within ten days after the receipt, but if misrepresentation of solvency has been made to the particular seller in writing within three months before delivery the ten day limitation does not apply. Except as provided in this subsection the seller may not base a right to reclaim goods on the buyer’s fraudulent or innocent misrepresentation of solvency or of intent to pay.
(3) The seller’s right to reclaim under subsection (2) is subject to the rights of a buyer in ordinary course or other good faith purchaser or lien creditor under this Article (section 2-403). Successful reclamation of goods excludes all others remedies with respect to them.
PART 7. REMEDIES Chapter 106: Section 2-703. Seller’s Remedies in General Section 2-703. Where the buyer wrongfully rejects or revokes acceptance of goods or fails to make a payment due on or before delivery or repudiates with respect to a part or the whole, then with respect to any goods directly affected and, if the breach is of the whole contract (section 2-612), then also with respect to the whole undelivered balance, the aggrieved seller may(a) withhold delivery of such goods;(b) stop delivery by any bailee as hereafter provided (section 2-705);(c) proceed under the next section respecting goods still unidentified to the contract;(d) resell and recover damages as hereafter provided (section 2-706);(e) recover damages for non-acceptance (section 2-708) or in a proper case the price (section 2-709);(f) cancel.
PART 7. REMEDIES Chapter 106: Section 2-704. Seller’s Right to Identify Goods to the Contract Notwithstanding Breach or to Salvage Unfinished Goods Section 2-704. (1) An aggrieved seller under the preceding section may(a) identify to the contract conforming goods not already identified if at the time he learned of the breach they are in his possession or control;(b) treat as the subject of resale goods which have demonstrably been intended for the particular contract even though those goods are unfinished.
(2) Where the goods are unfinished an aggrieved seller may in the exercise of reasonable commercial judgment for the purposes of avoiding loss and of effective realization either complete the manufacture and wholly identify the goods to the contract or cease manufacture and resell for scrap or salvage value or proceed in any other reasonable manner.
PART 7. REMEDIES Chapter 106: Section 2-705. Seller’s Stoppage of Delivery in Transit or Otherwise Section 2-705. (1) The seller may stop delivery of goods in the possession of a carrier or other bailee when he discovers the buyer to be insolvent (section 2-702) and may stop delivery of carload, truckload, planeload or larger shipments of express or freight when the buyer repudiates or fails to make a payment due before delivery or if for any other reason the seller has a right to withhold or reclaim the goods.
(2) As against such buyer the seller may stop delivery until(a) receipt of the goods by the buyer; or(b) acknowledgment to the buyer by any bailee of the goods except a carrier that the bailee holds the goods for the buyer; or(c) such acknowledgment to the buyer by a carrier by reshipment or as warehouseman; or(d) negotiation to the buyer of any negotiable document of title covering the goods.
(3)(a) To stop delivery the seller must so notify as to enable the bailee by reasonable diligence to prevent delivery of the goods.
(b) After such notification the bailee must hold and deliver the goods according to the directions of the seller but the seller is liable to the bailee for any ensuing charges or damages.
(c) If a negotiable document of title has been issued for goods the bailee is not obliged to obey a notification to stop until surrender of the document.
(d) A carrier who has issued a non-negotiable bill of lading is not obliged to obey a notification to stop received from a person other than the consignor.
PART 7. REMEDIES Chapter 106: Section 2-706. Seller’s Resale Including Contract for Resale Section 2-706. (1) Under the conditions stated in section 2-703 on seller’s remedies, the seller may resell the goods concerned or the undelivered balance thereof. Where the resale is made in good faith and in a commercially reasonable manner the seller may recover the difference between the resale price and the contract price together with any incidental damages allowed under the provisions of this Article (section 2-710), but less expenses saved in consequence of the buyer’s breach.
(2) Except as otherwise provided in subsection (3) or unless otherwise agreed resale may be at public or private sale including sale by way of one or more contracts to sell or of identification to an existing contract of the seller. Sale may be as a unit or in parcels and at any time and place and on any terms but every aspect of the sale including the method, manner, time, place and terms must be commercially reasonable. The resale must be reasonably identified as referring to the broken contract, but it is not necessary that the goods be in existence or that any or all of them have been identified to the contract before the breach.
(3) Where the resale is at private sale the seller must give the buyer reasonable notification of his intention to resell.
(4) Where the resale is at public sale(a) only identified goods can be sold except where there is a recognized market for a public sale of futures in goods of the kind; and(b) it must be made at a usual place or market for public sale if one is reasonably available and except in the case of goods which are perishable or threaten to decline in value speedily the seller must give the buyer reasonable notice of the time and place of the resale; and(c) if the goods are not to be within the view of those attending the sale the notification of sale must state the place where the goods are located and provide for their reasonable inspection by prospective bidders; and(d) the seller may buy.
(5) A purchaser who buys in good faith at a resale takes the goods free of any rights of the original buyer even though the seller fails to comply with one or more of the requirements of this section.
(6) The seller is not accountable to the buyer for any profit made on any resale. A person in the position of a seller (section 2-707) or a buyer who has rightfully rejected or justifiably revoked acceptance must account for any excess over the amount of his security interest, as hereinafter defined (subsection (3) of section 2-711).
PART 7. REMEDIES Chapter 106: Section 2-707. “Person in the Position of a Seller” Section 2-707. (1) A “person in the position of a seller” includes as against a principal an agent who has paid or become responsible for the price of goods on behalf of his principal or anyone who otherwise holds a security interest or other right in goods similar to that of a seller.
(2) A person in the position of a seller may as provided in this Article withhold or stop delivery (section 2-705) and resell (section 2-706) and recover incidental damages (section 2-710).
PART 7. REMEDIES Chapter 106: Section 2-708. Seller’s Damages for Non-acceptance or Repudiation Section 2-708. (1) Subject to subsection (2) and to the provisions of this Article with respect to proof of market price (section 2-723), the measure of damages for non-acceptance or repudiation by the buyer is the difference between the market price at the time and place for tender and the unpaid contract price together with any incidental damages provided in this Article (section 2-710), but less expenses saved in consequence of the buyer’s breach.
(2) If the measure of damages provided in subsection (1) is inadequate to put the seller in as good a position as performance would have done then the measure of damages is the profit (including reasonable overhead) which the seller would have made from full performance by the buyer, together with any incidental damages provided in this Article (section 2-710), due allowance for costs reasonably incurred and due credit for payments or proceeds of resale.
PART 7. REMEDIES Chapter 106: Section 2-709. Action for the Price Section 2-709. (1) When the buyer fails to pay the price as it becomes due the seller may recover, together with any incidental damages under the next section, the price(a) of goods accepted or of conforming goods lost or damaged within a commercially reasonable time after risk of their loss has passed to the buyer; and(b) of goods identified to the contract if the seller is unable after reasonable effort to resell them at a reasonable price or the circumstances reasonably indicate that such effort will be unavailing.
(2) Where the seller sues for the price he must hold for the buyer any goods which have been identified to the contract and are still in his control except that if resale becomes possible he may resell them at any time prior to the collection of the judgment. The net proceeds of any such resale must be credited to the buyer and payment of the judgment entitles him to any goods not resold.
(3) After the buyer has wrongfully rejected or revoked acceptance of the goods or has failed to make a payment due or has repudiat
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