1. (a) Unless the context otherwise requires, words or phrases defined in this section, or in the additional definitions contained in other articles of this subtitle that apply to particular articles or parts thereof, have the meanings stated.

2. (b) Subject to definitions contained in other articles of this subtitle that apply to particular articles or parts thereof:

   1. (1) “Action”, in the sense of a judicial proceeding, includes recoupment, counterclaim, set-off, suit in equity, and any other proceeding in which rights are determined.
   2. (2) “Aggrieved party” means a party entitled to pursue a remedy.
   3. (3) “Agreement”, as distinguished from “contract”, means the bargain of the parties in fact, as found in their language or inferred from other circumstances, including course of performance, course of dealing, or usage of trade as provided in § 28:1-303.
   4. (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. (5) “Bearer” means a person in control of a negotiable electronic document of title or a person in possession of a negotiable instrument, negotiable tangible document of title, or certificated security that is payable to bearer or indorsed in blank.
   6. (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.
   7. (7) “Branch” includes a separately incorporated foreign branch of a bank.
   8. (8) “Burden of establishing” a fact means the burden of persuading the trier of fact that the existence of the fact is more probable than its nonexistence.
   9. (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 preexisting 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. Buyer in ordinary course of business does not include a person that acquires goods in a transfer in bulk or as security for or in total or partial satisfaction of a money debt.
   10. (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" or not is a decision for the court.
   11. (11) “Consumer” means an individual who enters into a transaction primarily for personal, family, or household purposes.
   12. (12) “Contract”, as distinguished from “agreement”, means the total legal obligation that results from the parties’ agreement as determined by this subtitle and as supplemented by any other applicable laws.
   13. (13) “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.
   14. (14) “Defendant” includes a person in the position of defendant in a counterclaim, cross-claim, or third-party claim.
   15. (15) "Delivery", with respect to an electronic document of title, means voluntary transfer of control; and, with respect to an instrument, a tangible document of title, or an authoritative tangible copy of a record evidencing chattel paper, means voluntary transfer of possession.

   16. (16)

       1. (A) “Document of title” means a record that:

          1. (i) 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 the record covers; and
          2. (ii) Purports to be issued by or addressed to a bailee and to cover goods in the bailee’s possession which are either identified or are fungible portions of an identified mass.
       2. (B) The term “document of title” includes a bill of lading, transport document, dock warrant, dock receipt, warehouse receipt, and order for delivery of goods. An “electronic document of title” means a document of title evidenced by a record consisting of information stored in an electronic medium. A “tangible document of title” means a document of title evidenced by a record consisting of information that is inscribed on a tangible medium.
   17. (16A) "Electronic" means relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities.
   18. (17) “Fault” means a default, breach, or wrongful act or omission.

   19. (18) “Fungible goods” means:

       1. (A) Goods of which any unit, by nature or usage of trade, is the equivalent of any other like unit; or
       2. (B) Goods that by agreement are treated as equivalent.
   20. (19) “Genuine” means free of forgery or counterfeiting.
   21. (20) “Good faith,” except as otherwise provided in Article 5, means honesty in fact and the observance of reasonable commercial standards of fair dealing.

   22. (21) “Holder” means:

       1. (A) The person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession; or
       2. (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
       3. (C) The person in control, other than pursuant to § 28:7-106(g), of a negotiable electronic document of title.
   23. (22) “Insolvency proceeding” includes an assignment for the benefit of creditors or other proceeding intended to liquidate or rehabilitate the estate of the person involved.

   24. (23) “Insolvent” means:

       1. (A) Having generally ceased to pay debts in the ordinary course of business other than as a result of bona fide dispute;
       2. (B) Being unable to pay debts as they become due; or
       3. (C) Being insolvent within the meaning of federal bankruptcy law.
   25. (24) "Money" means a medium of exchange that is currently authorized or adopted by a domestic or foreign government. The term "money" includes a monetary unit of account established by an intergovernmental organization or pursuant to an agreement between 2 or more countries. The term "money" does not include an electronic record that is a medium of exchange recorded and transferable in a system that existed and operated for the medium of exchange before the medium of exchange was authorized or adopted by the government.
   26. (25) “Organization” means a person other than an individual.
   27. (26) “Party”, as distinguished from “third party”, means a person that has engaged in a transaction or made an agreement subject to this subtitle.
   28. (27) "Person" means an individual, estate, business or nonprofit entity, government or governmental subdivision, agency, or instrumentality, or other legal entity. The term "person" includes a protected series, however denominated, of an entity, if the protected series is established under law, other than this subtitle, 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.
   29. (28) “Present value” means the amount as of a date certain of one or more sums payable in the future, discounted to the date certain by use of either an interest rate specified by the parties if that rate is not manifestly unreasonable at the time the transaction is entered into or, if an interest rate is not so specified, a commercially reasonable rate that takes into account the facts and circumstances at the time the transaction is entered into.
   30. (29) “Purchase” means taking by sale, lease, discount, negotiation, mortgage, pledge, lien, security interest, issue or reissue, gift, or any other voluntary transaction creating an interest in property.
   31. (30) “Purchaser” means a person that takes by purchase.
   32. (31) “Record” means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.
   33. (32) “Remedy” means any remedial right to which an aggrieved party is entitled with or without resort to a tribunal.
   34. (33) “Representative” means a person empowered to act for another, including an agent, an officer of a corporation or association, and a trustee, executor, or administrator of an estate.
   35. (34) “Right” includes remedy.
   36. (35) “Security interest” means an interest in personal property or fixtures which secures payment or performance of an obligation. The term “security interest” includes any interest of a consignor and a buyer of accounts, chattel paper, a payment intangible, or a promissory note in a transaction that is subject to Article 9. The term “security interest” does not include the special property interest of a buyer of goods on identification of those goods to a contract for sale under § 28:2-401, but a buyer may also acquire a security interest by complying with Article 9. Except as otherwise provided in § 28:2-505, 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 under § 28:2-401 is limited in effect to a reservation of a security interest. Whether a transaction in the form of a lease creates a security interest is determined pursuant to § 28:1-203.

   37. (36) "Send" in connection with a record or notification means:

       1. (A) To deposit in the mail, or deliver for transmission, or transmit by any other usual means of communication, with postage or cost of transmission provided for, addressed to any address reasonable under the circumstances; or
       2. (B) To cause the record or notification to be received within the time it would have been received if properly sent under subparagraph (A) of this paragraph.

   38. (37) "Sign", "signed", "signing", and "signature" mean with present intent to authenticate or adopt a record:

       1. (i) To execute or adopt a tangible symbol; or
       2. (ii) To attach to or logically associate with the record an electronic symbol, sound, or process.
   39. (38) “State” means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States.
   40. (39) “Surety” includes a guarantor or other secondary obligor.
   41. (40) “Term” means a portion of an agreement that relates to a particular matter.
   42. (41) “Unauthorized signature” means a signature made without actual, implied, or apparent authority. The term “unauthorized signature” includes a forgery.
   43. (42) “Warehouse receipt” means a document of title issued by a person engaged in the business of storing goods for hire.
   44. (43) “Writing” includes printing, typewriting, or any other intentional reduction to tangible form. “Written” has a corresponding meaning.

Uniform Commercial Code Comment

43. “Written” or “writing.” Unchanged from former Section 1-201.

42. “Warehouse receipt.” Unchanged from former Section 1-201, which was derived from Section 76(1), Uniform Sales Act; Section 1, Uniform Warehouse Receipts Act. Receipts issued by a field warehouse are included, provided the warehouseman and the depositor of the goods are different persons.

41. “Unauthorized signature.” Unchanged from former Section 1-201.

40. “Term.” Unchanged from former Section 1-201.

39. “Surety.” This definition makes it clear that “surety” includes all secondary obligors, not just those whose obligation refers to the person obligated as a surety. As to the nature of secondary obligations generally, see Restatement (Third), Suretyship and Guaranty Section 1 (1996).

38. “State.” This is the standard definition of the term used in acts prepared by the National Conference of Commissioners on Uniform State Laws.

37. “Signed.” Derived from former Section 1-201. Former Section 1-201 referred to “intention to authenticate”; because other articles now use the term “authenticate,” the language has been changed to “intention to adopt or accept.” The latter formulation is derived from the definition of “authenticate” in Section 9-102(a)(7). This provision refers only to writings, because the term “signed,” as used in some articles, refers only to writings. This provision also makes it clear that, as the term “signed” is used in the Uniform Commercial Code, a complete signature is not necessary. The symbol may be printed, stamped or written; it may be by initials or by thumbprint. It may be on any part of the document and in appropriate cases may be found in a billhead or letterhead. No catalog of possible situations can be complete and the court must use common sense and commercial experience in passing upon these matters. The question always is whether the symbol was executed or adopted by the party with present intention to adopt or accept the writing.

36. “Send.” Derived from former Section 1-201. Compare “notifies”.

35. “Security Interest.” The definition is the first paragraph of the definition of “security interest” in former Section 1-201, with minor stylistic changes. The remaining portion of that definition has been moved to Section 1-203. Note that, because of the scope of Article 9, the term includes the interest of certain outright buyers of certain kinds of property.

34. “Right.” Except for minor stylistic changes, identical to former Section 1-201.

33. “Representative.” Derived from former Section 1-201. Reorganized, and form changed from “includes” to “means.”

32. “Remedy.” Unchanged from former Section 1-201. The purpose is to make it clear that both remedy and right (as defined) include those remedial rights of “self help” which are among the most important bodies of rights under the Uniform Commercial Code, remedial rights being those to which an aggrieved party may resort on its own.

31. “Record.” Derived from Section 9-102(a)(69).

30. “Purchaser.” Unchanged from former Section 1-201.

29. “Purchase.” Derived from former Section 1-201. The form of definition has been changed from “includes” to “means.”

28. “Present value.” This definition was formerly contained within the definition of “security interest” in former Section 1-201(37).

27. “Person.” The former definition of this word has been replaced with the standard definition used in acts prepared by the National Conference of Commissioners on Uniform State Laws.

26. “Party.” Substantively identical to former Section 1-201. Mention of a party includes, of course, a person acting through an agent. However, where an agent comes into opposition or contrast to the principal, particular account is taken of that situation.

25. “Organization.” The former definition of this word has been replaced with the standard definition used in acts prepared by the National Conference of Commissioners on Uniform State Laws.

24. “Money.” Substantively identical to former Section 1-201. The test is that of sanction of government, whether by authorization before issue or adoption afterward, which recognizes the circulating medium as a part of the official currency of that government. The narrow view that money is limited to legal tender is rejected.

23. “Insolvent.” Derived from former Section 1-201. The three tests of insolvency- “generally ceased to pay debts in the ordinary course of business other than as a result of a bona fide dispute as to them,” “unable to pay debts as they become due,” and “insolvent within the meaning of the federal bankruptcy law”- are expressly set up as alternative tests and must be approached from a commercial standpoint.

22. “Insolvency proceedings.” Unchanged from former Section 1-201.

21. “Holder.” Derived from former Section 1-201. The definition has been reorganized for clarity.

Over time, however, amendments to the Uniform Commercial Code brought the Article 2 merchant concept of good faith (subjective honesty and objective commercial reasonableness) into other Articles. First, Article 2A explicitly incorporated the Article 2 standard. See Section 2A-103(7). Then, other Articles broadened the applicability of that standard by adopting it for all parties rather than just for merchants.See, e.g.andthe observance of reasonable commercial standards of fair dealing. Only revised Article 5 defines “good faith” solely in terms of subjective honesty, and only Article 6 and Article 7 are without definitions of good faith. (It should be noted that, while revised Article 6 did not define good faith, Comment 2 to revised Section 6-102 states that “this Article adopts the definition of ‘good faith’ in Article 1 in all cases, even when the buyer is a merchant.”) Given these developments, it is appropriate to move the broader definition of “good faith” to Article 1. Of course, this definition is subject to the applicability of the narrower definition in revised Article 5., Sections 3-103(a)(4), 4A-105(a)(6), 8-102(a)(10), and 9-102(a)(43). All of these definitions are comprised of two elements- honesty in fact

20. “Good faith.” Former Section 1-201(19) defined “good faith” simply as honesty in fact; the definition contained no element of commercial reasonableness. Initially, that definition applied throughout the Code with only one exception. Former Section 2-103(1)(b) provided that “in this Article . . .in Article 2;thus, so construed it would not define “good faith” for its most important use- the obligation of good faith imposed by former Section 1-203.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.” This alternative definition was limited in applicability in three ways. First, it applied only to transactions within the scope of Article 2. Second, it applied only to merchants. Third, strictly construed it applied only to uses of the phrase “good faith”

19. “Genuine.” Unchanged from former Section 1-201.

18. “Fungible goods.” Derived from former Section 1-201. References to securities have been deleted because Article 8 no longer uses the term “fungible” to describe securities. Accordingly, this provision now defines the concept only in the context of goods.

17. “Fault.” Derived from former Section 1-201. “Default” has been added to the list of events constituting fault.

The definition is broad enough to include an airway bill.

The goods must be “described,” but the description may be by marks or labels and may be qualified in such a way as to disclaim personal knowledge of the issuer regarding contents or condition. However, baggage and parcel checks and similar “tokens” of storage which identify stored goods only as those received in exchange for the token are not covered by this Article.

Dock warrants were within the Sales Act definition of document of title apparently for the purpose of recognizing a valid tender by means of such paper. In current commercial practice a dock warrant or receipt is a kind of interim certificate issued by steamship companies upon delivery of the goods at the dock, entitling a designated person to have issued to him at the company’s office a bill of lading. The receipt itself is invariably nonnegotiable in form although it may indicate that a negotiable bill is to be forthcoming. Such a document is not within the general compass of the definition, although trade usage may in some cases entitle such paper to be treated as a document of title. If the dock receipt actually represents a storage obligation undertaken by the shipping company, then it is a warehouse receipt within this section regardless of the name given to the instrument.

16. “Document of title.” Unchanged from former Section 1-201, which was derived from Section 76, Uniform Sales Act. By making it explicit that the obligation or designation of a third party as “bailee” is essential to a document of title, this definition clearly rejects any such result as obtained inHixson v. Ward, 254 Ill.App. 505 (1929), which treated a conditional sales contract as a document of title. Also the definition is left open so that new types of documents may be included. It is unforeseeable what documents may one day serve the essential purpose now filled by warehouse receipts and bills of lading. Truck transport has already opened up problems which do not fit the patterns of practice resting upon the assumption that a draft can move through banking channels faster than the goods themselves can reach their destination. There lie ahead air transport and such probabilities as teletype transmission of what may some day be regarded commercially as “Documents of Title.” The definition is stated in terms of the function of the documents with the intention that any document which gains commercial recognition as accomplishing the desired result shall be included within its scope. Fungible goods are adequately identified within the language of the definition by identification of the mass of which they are a part.

15. “Delivery.” Derived from former Section 1-201. The reference to certificated securities has been deleted in light of the more specific treatment of the matter in Section 8-301.

14. “Defendant.” Except for minor stylistic changes, identical to former Section 1-201, which was derived from Section 76, Uniform Sales Act.

13. “Creditor.” Unchanged from former Section 1-201.

12. “Contract.” Except for minor stylistic changes, identical to former Section 1-201.

11. “Consumer.” Derived from Section 9-102(a)(25).

10. “Conspicuous.” Derived from former Section 1-201(10). This definition states the general standard that to be conspicuous a term ought to be noticed by a reasonable person. Whether a term is conspicuous is an issue for the court. Subparagraphs (A) and (B) set out several methods for making a term conspicuous. Requiring that a term be conspicuous blends a notice function (the term ought to be noticed) and a planning function (giving guidance to the party relying on the term regarding how that result can be achieved). Although these paragraphs indicate some of the methods for making a term attention-calling, the test is whether attention can reasonably be expected to be called to it. The statutory language should not be construed to permit a result that is inconsistent with that test.

The first sentence of paragraph (9) makes clear that a buyer from a pawnbroker cannot be a buyer in ordinary course of business. The second sentence explains what it means to buy “in the ordinary course.” The penultimate sentence prevents a buyer that does not have the right to possession as against the seller from being a buyer in ordinary course of business. Concerning when a buyer obtains possessory rights, see Sections 2-502 and 2-716. However, the penultimate sentence is not intended to affect a buyer’s status as a buyer in ordinary course of business in cases (such as a “drop shipment”) involving delivery by the seller to a person buying from the buyer or a donee from the buyer. The requirement relates to whether as against the seller the buyer or one taking through the buyer has possessory rights.

9. “Buyer in ordinary course of business.” Except for minor stylistic changes, identical to former Section 1-201 (as amended in conjunction with the 1999 revisions to Article 9). The major significance of the phrase lies in Section 2-403 and in the Article on Secured Transactions (Article 9).

8. “Burden of establishing a fact.” Unchanged from former Section 1-201.

7. “Branch.” Unchanged from former Section 1-201.

6. “Bill of Lading.” Derived from former Section 1-201. The reference to, and definition of, an “airbill” has been deleted as no longer necessary.

5. “Bearer.” Unchanged from former Section 1-201, which was derived from Section 191, Uniform Negotiable Instruments Law.

4. “Bank.” Derived from Section 4A-104.

3. “Agreement.” Derived from former Section 1-201. As used in the Uniform Commercial Code the word is intended to include full recognition of usage of trade, course of dealing, course of performance and the surrounding circumstances as effective parts thereof, and of any agreement permitted under the provisions of the Uniform Commercial Code to displace a stated rule of law. Whether an agreement has legal consequences is determined by applicable provisions of the Uniform Commercial Code and, to the extent provided in Section 1-103, by the law of contracts.

2. “Aggrieved party.” Unchanged from former Section 1-201.

1. “Action.” Unchanged from former Section 1-201, which was derived from similar definitions in Section 191, Uniform Negotiable Instruments Law; Section 76, Uniform Sales Act; Section 58, Uniform Warehouse Receipts Act; Section 53, Uniform Bills of Lading Act.

Other than minor stylistic changes and renumbering, the remaining definitions in this section are as in former Article 1 except as noted below.

Two definitions in former Section 1-201 have been deleted. The definition of “honor” in former Section 1-201(21) has been moved to Section 2-103(1)(b), inasmuch as the definition only applies to the use of the word in Article 2. The definition of “telegram” in former Section 1-201(41) has been deleted because that word no longer appears in the definition of “conspicuous.”

Some definitions in former Section 1-201 have been reformulated as substantive provisions and have been moved to other sections. See Sections 1-202 (explicating concepts of notice and knowledge formerly addressed in Sections 1-201(25)-(27)), 1-204 (determining when a person gives value for rights, replacing the definition of “value” in former Section 1-201(44)), and 1-206 (addressing the meaning of presumptions, replacing the definitions of “presumption” and “presumed” in former Section 1-201(31)). Similarly, the portion of the definition of “security interest” in former Section 1-201(37) which explained the difference between a security interest and a lease has been relocated to Section 1-203.

Changes from former law: In order to make it clear that all definitions in the Uniform Commercial Code (not just those appearing in Article 1, as stated in former Section 1-201, but also those appearing in other Articles) do not apply if the context otherwise requires, a new subsection (a) to that effect has been added, and the definitions now appear in subsection (b). The reference in subsection (a) to the “context” is intended to refer to the context in which the defined term is used in the Uniform Commercial Code. In other words, the definition applies whenever the defined term is used unless the context in which the defined term is used in the statute indicates that the term was not used in its defined sense. Consider, for example, Sections 3-103(a)(9) (defining “promise,” in relevant part, as “a written undertaking to pay money signed by the person undertaking to pay”) and 3-303(a)(1) (indicating that an instrument is issued or transferred for value if “the instrument is issued or transferred for a promise of performance, to the extent that the promise has been performed.” It is clear from the statutory context of the use of the word “promise” in Section 3-303(a)(1) that the term was not used in the sense of its definition in Section 3-103(a)(9). Thus, the Section 3-103(a)(9) definition should not be used to give meaning to the word “promise” in Section 3-303(a).

Source: Former Section 1-201.

History

Dec. 30, 1963, 77 Stat. 632, Pub. L. 88-243, § 1

Mar. 16, 1982, D.C. Law 4-85, § 3, 29 DCR 309

Mar. 16, 1993, D.C. Law 9-196, § 2, 39 DCR 9165

Mar. 23, 1995, D.C. Law 10-249, § 2(b)(1), 42 DCR 467

Apr. 9, 1997, D.C. Law 11-255, § 27(jj), 44 DCR 1271

Oct. 26, 2000, D.C. Law 13-201, § 201(b)(2), 47 DCR 7576

Apr. 27, 2013, D.C. Law 19-299, § 2, 60 DCR 2634

Apr. 20, 2024, D.C. Law 25-158, § 2(b)(1)

Effect of Amendments

D.C. Law 13-201, enacting a new Article 9 of the Uniform Commercial Code applicable July 1, 2001, made conforming amendments to this section applicable upon the same date.

Prior Codifications

1973 Ed., § 28:1-201.

1981 Ed., § 28:1-201.

Section References

This section is referenced in § 28:3-103, § 28:4A-105, § 28:10-104, § 28-4915, § 40-102, § 50-601, and § 50-1201.