Subject to additional definitions contained
in IC 26-1-2 through IC 26-1-10 which are applicable to specific
provisions, and unless the context otherwise requires, in IC 26-1:
(1) "Action" in the sense of a judicial proceeding includes
recoupment, counterclaim, setoff, 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 IC 26-1-1-205. Whether an agreement
has legal consequences is determined by the provisions of IC 26-1, if applicable; otherwise by the law of contracts (IC 26-1-1-103). (Compare "Contract".)
(4) "Bank" means a person engaged in the business of banking
and includes a savings bank, savings and loan association, credit
union, and trust company.
(5) "Bearer" means the person:
(A) in control of a negotiable electronic document of title; or
(B) in possession of a negotiable instrument, a negotiable
tangible document of title, or a certificated security payable to
bearer or endorsed in blank.
(6) "Bill of lading" means a document of title evidencing the
receipt of goods for shipment issued by a person engaged in the
business of directly or indirectly transporting or forwarding
goods. The term does not include a warehouse receipt. The term
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 nonexistence.
(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 of business 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 require goods or documents of title under a
preexisting contract for sale. Only a buyer that takes possession
of the goods or has a right to recover the goods from that seller
under IC 26-1-2 may be a buyer in ordinary course of business. A
person that acquires goods in a transfer in bulk or as security for
or total or partial satisfaction of a money debt is not a buyer in
ordinary course of business.
(10) "Conspicuous", with reference to a term, means so written,
displayed, or presented that, based on the totality of the
circumstances, a reasonable person against which it is to operate
ought to have noticed it. Whether a term is "conspicuous" is a
decision for the court.
(11) "Contract" means the total legal obligation which results
from the parties' agreement as affected by this Act 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:
(A) an electronic document of title, means voluntary transfer of
control; and
(B) an instrument, a tangible document of title, or an
authoritative tangible copy of a record evidencing chattel paper,
means voluntary transfer of possession.
(15) "Document of title" means a record that:
(A) in the regular course of business or financing, is treated as
adequately evidencing that the person in possession or control
of the record is entitled to receive, control, hold, and dispose of
the record and the goods it covers; and
(B) purports to be issued by or addressed to a bailee and
purports to cover goods in the bailee's possession which are
either identified or are fungible portions of an identified mass.
The term includes a bill of lading, transport document, dock
warrant, dock receipt, warehouse receipt, or order for delivery of
goods. An electronic document of title means a document of title
evidenced by a record consisting of information stored in an
electronic medium. A tangible document of title means a
document of title evidenced by a record consisting of information
that is inscribed on a tangible medium.
(16) The following terms have the following meanings:
(A) "Electronic" means relating to technology having electrical,
digital, magnetic, wireless, optical, electromagnetic, or similar
capabilities.
(B) "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 IC 26-1 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", except as otherwise provided by IC 26-1-4 or
IC 26-1-5.1, means honesty in fact and the observance of
reasonable commercial standards of fair dealing.
(20) "Holder" means:
(A) the person in possession of a negotiable instrument that is
payable either to bearer or to an identified person if the
identified person is in possession of the instrument;
(B) the person in possession of a negotiable tangible document
of title if the goods are deliverable either to bearer or to the
order of the person in possession; or
(C) the person in control, other than under IC 26-1-7-106(g), of
a negotiable electronic document of title.
(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 the
person's debts in the ordinary course of business or cannot pay the
person's debts as they become due or is insolvent within the
meaning of the federal bankruptcy law.
(24) "Money" means a medium of exchange that is currently
authorized or adopted by a domestic or foreign government and
is not in an electronic form. The term includes a monetary unit of
account established by an intergovernmental organization or by
agreement between two (2) or more nations. The term does not
include a central bank digital currency that is currently adopted,
or that may be adopted, by the United States government, a
foreign government, a foreign reserve, or a foreign sanctioned
central bank.
(25) A person has "notice" of a fact when:
(a) the person has actual knowledge of it;
(b) the person has received a notice or notification of it; or
(c) from all the facts and circumstances known to the person at
the time in question, the person has reason to know that it
exists.
A person "knows" or has "knowledge" of a fact when the person
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 IC 26-1.
(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 the person's 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 the
person as the place for receipt of such communications.
(27) Notice, knowledge, or a notice of 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 the person's 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 the person's
regular duties or unless the person 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 (2) 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 IC 26-1.
(30) "Person" means an individual, corporation, business trust,
estate, trust, partnership, limited liability company, association,
joint venture, government, governmental subdivision, agency, or
instrumentality, or any other legal or commercial entity. The term
includes a protected series, however denominated, of an entity if
the protected series is established under law other than IC 26-1
that limits, or limits if conditions specified under the law are
satisfied, the ability of a creditor of the entity or of any other
protected series of the entity to satisfy a claim from assets of the
protected series.
(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
nonexistence.
(32) "Purchase" includes taking by sale, discount, negotiation,
mortgage, pledge, lien, security interest, issue or reissue, gift, or
any other voluntary transaction creating an interest in property.
(33) "Purchaser" means a person who takes by purchase.
(33a) "Registered mail" includes certified mail.
(33b) "Record", except as used in IC 26-1-2.1-309, means
information that is inscribed on a tangible medium or that is
stored in an electronic or other medium and is retrievable in
perceivable form.
(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 IC 26-1-9.1. The special
property interest of a buyer of goods on identification of such
goods to a contract for sale under IC 26-1-2-401 is not a security
interest, but a buyer may also acquire a security interest by
complying with IC 26-1-9.1. Except as otherwise provided in IC 26-1-2-505, the right of a seller or lessor of goods under IC 26-1-2
or IC 26-1-2.1 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 IC 26-1-9.1. The retention
or reservation of title by a seller of goods notwithstanding
shipment or delivery to the buyer (IC 26-1-2-401) 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 merely 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 is 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:
(x) 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.
(y) "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.
(z) "Present value" means the amount as of a date certain of one
(1) or more sums payable in the future, discounted to the date
certain. 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 a record or notification means:
(A) to deposit in the mail, deliver for transmission, or transmit
by any other usual means of communication, with postage or
cost of transmission provided for, and addressed to any address
reasonable under the circumstances; or
(B) to cause the record or notification to be received within the
time it would have been received if properly sent under clause
(A).
(39) "Sign" means, with present intent to authenticate or adopt a
record, to:
(A) execute or adopt a tangible symbol; or
(B) attach to or logically associate with the record an electronic
symbol, sound, or process.
"Signed", "signing", and "signature" have corresponding
meanings.
(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 means one made without actual,
implied, or apparent authority and includes a forgery.
(44) "Value". Except as otherwise provided in IC 26-1-3.1, IC 26-1-4, IC 26-1-5.1, IC 26-1-6.2, and IC 26-1-12, a person gives
value for rights if the person 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 chargeback is provided for in
the event of difficulties in collection;
(b) as security for or in total or partial satisfaction of a
preexisting claim;
(c) by accepting delivery pursuant to a preexisting contract for
purchase; or
(d) generally, in return for any consideration sufficient to
support a simple contract.
(45) "Warehouse receipt" means a document of title 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.
Formerly: Acts 1963, c.317, s.1-201. As amended by
P.L.93-1985, SEC.3; P.L.120-1987, SEC.46; P.L.3-1990, SEC.93;
P.L.189-1991, SEC.2; P.L.222-1993, SEC.1; P.L.57-2000, SEC.12;
P.L.143-2007, SEC.3; P.L.135-2009, SEC.1; P.L.54-2011, SEC.1;
P.L.199-2023, SEC.1.