Colorado § 4-1-201 - General definitions.

§ 4-1-201. General definitions.

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

(b) Subject to definitions contained in other articles of this title 4 that apply to particular articles or parts of this title 4:

(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) "Aggrieved party" means a party entitled to pursue a remedy.

(3) "Agreement" 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 section 4-1-303. (Compare "contract".)

(3.5) "Authenticate" means:

(A) To sign; or

(B) With the intent to sign a record, otherwise to execute or adopt an electronic symbol, sound, message, or process referring to, attached to, included in, or logically associated or linked with, that record.

(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 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) "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) "Branch" includes a separately incorporated foreign branch of a bank.

(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) "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 of this title 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", with reference to a term, means so written, displayed, or presented that 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.

(10.5) "Consumer" means an individual who enters into a transaction primarily for personal, family, or household purposes.

(11) "Contract" means the total legal obligation that results from the parties' agreement as determined by this title as supplemented by any other applicable laws. (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 counterclaim or third-party claim.

(14) "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.

(15) "Document of title" means a record (i) that 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 (ii) that 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. The term 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.

(15.5) "Electronic" means relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities.

(16) "Fault" means a wrongful act, omission, breach, or default.

(17) "Fungible goods" means either:

(A) Goods of which any unit, by nature or usage of trade, is the equivalent of any other like unit; or

(B) Goods that by agreement are treated as equivalent.

(18) "Genuine" means free of forgery or counterfeiting.

(19) "Good faith", except as provided in article 5 of this title, 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 that is the person in possession;

(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 pursuant to section 4-7-106 (g), of a negotiable electronic document of title.

(21) "Insolvency proceeding" includes an assignment for the benefit of creditors or other proceeding intended to liquidate or rehabilitate the estate of the person involved.

(22) An "insolvent" person is a person that:

(A) Has generally ceased to pay debts in the ordinary course of business other than as a result of a bona fide dispute as to the debts;

(B) Is unable to pay debts as they become due; or

(C) Is insolvent within the meaning of federal bankruptcy law.

(23) "Money" means a medium of exchange that is currently authorized or adopted by a domestic or foreign government and that is not in an electronic form. The term includes a monetary unit of account established by an intergovernmental organization or by agreement between two or more countries.

(24) "Organization" means a person other than an individual.

(25) "Party", as distinct from a "third party", means a person that has engaged in a transaction or made an agreement subject to this title.

(26) "Person" means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, government, government 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 the laws of another state that:

(A) 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; and

(B) Treats the protected series as an entity.

(27) "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.

(28) "Presumption" or "presumed" means that the trier of fact must find the existence of the fact presumed unless and until evidence is introduced that would support a finding of its nonexistence.

(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.

(30) "Purchaser" means a person that takes by purchase.

(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.

(32) "Remedy" means any remedial right to which an aggrieved party is entitled, with or without resort to a tribunal.

(33) "Representative" means any 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.

(34) "Right" includes remedy.

(35) "Security interest" means an interest in personal property or fixtures that 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 of this title. The special property interest of a buyer of goods on identification of those goods to a contract for sale under section 4-2-401 is not a "security interest", but a buyer may also acquire a "security interest" by complying with article 9 of this title. Except as otherwise provided in section 4-2-505, the right of a seller or lessor of goods under article 2 or 2.5 of this title 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 of this title. The retention or reservation of title by a seller of goods notwithstanding shipment or delivery to the buyer (section 4-2-401) 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 section 4-1-203.

(36) "Send", in connection with a record or notification, means to:

(A) Deposit in the mail, 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

(B) Cause the record or notification to be received within the time it would have been received if properly sent under subsection (b)(36)(A) of this section.

(37) (A) "Sign" means, with present intent to authenticate or adopt a record:

(i) Execute or adopt a tangible symbol; or

(ii) Attach to or logically associate with the record an electronic symbol, sound, or process.

(B) "Signed", "signing", and "signature" have corresponding meanings.

(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.

(39) "Surety" includes a guarantor or other secondary obligor.

(40) "Term" means a portion of an agreement that relates to a particular matter.

(41) "Unauthorized signature" means a signature made without actual, implied, or apparent authority. The term includes a forgery.

(42) "Warehouse receipt" means a document of title issued by a person engaged in the business of storing goods for hire.

(43) "Writing" includes printing, typewriting, or any other intentional reduction to tangible form. "Written" has a corresponding meaning.

Source: L. 2006: Entire article R&RE, p. 458, § 1, effective September 1. L. 2007: (b)(5), (b)(15), (b)(20)(A), and (b)(20)(C) amended, p. 374, § 26, effective August 3. L. 2023: IP(b), (b)(10), (b)(14), (b)(20)(C), (b)(23), (b)(26), (b)(36), and (b)(37) amended and (b)(15.5) added, (SB 23-090), ch. 136, p. 524, § 1 effective August 7.

Editor's note: This section is similar to former § 4-1-201 as it existed prior to 2006.

Cross references: For offenses relating to security interest, see §§ 18-5-504, 18-5-505, and 18-5-511.

ANNOTATION

I. General Consideration.

II. Agreement.

III. Buyer in Ordinary Course of Business.

IV. Conspicuous.

V. Creditor.

VI. Documents of Title.

VII. Genuine.

VIII. Good Faith.

IX. Holder.

X. Purchase.

XI. Purchaser.

XII. Written or Writing.

I. GENERAL CONSIDERATION.

Law reviews. For article, "Secured Transactions — Part 1: Attachment, Perfection and Priorities", see 11 Colo. Law. 2939 (1982). For article, "Commercial Law", which discusses Tenth Circuit decisions dealing with questions of definition and interpretation, see 63 Den. U.L. Rev. 225 (1986). For article, "Criminal Law", which discusses Tenth Circuit decisions dealing with good faith defense, see 63 Den. U.L. Rev. 291 (1986).

Annotator's note. Since § 4-1-201 is similar to § 4-1-201 as it existed prior to the 2006 repeal and reenactment of this article, relevant cases construing that provision have been included in the annotations to this section.

Applied in Blake v. Samuelson, 34 Colo. App. 183, 524 P.2d 624 (1974); Budget Syst. v. Seifert Pontiac, Inc., 40 Colo. App. 406, 579 P.2d 87 (1978); State, Dept. of Natural Res. v. Benjamin, 41 Colo. App. 520, 587 P.2d 1207 (1978); Comm'l Credit v. Univ. Nat'l Bank, 590 F.2d 849 (10th Cir. 1979); W. Nat'l Bank v. ABC Drilling Co., 42 Colo. App. 407, 599 P.2d 942 (1979); Jackson v. Sec. Indus. Bank, 4 B.R. 293 (Bankr. D. Colo. 1980); Layne v. Fort Carson Nat'l Bank, 655 P.2d 856 (Colo. App. 1982); Ackmann v. Merchants Mtg. & Trust Corp., 659 P.2d 697 (Colo. App. 1982); Walgreen Co. v. Charnes, 859 P.2d 235 (Colo. App. 1992).

II. AGREEMENT.

Evidence of previous course of performance is admissible. Evidence of course of dealing and course of performance is admissible if it does not directly contradict the terms of a written agreement, but merely explains or supplements it. Great W. Sugar Co. v. N. Natural Gas Co., 661 P.2d 684 (Colo. App. 1982), aff'd sub nom. KN Energy, Inc. v. Great W. Sugar Co., 698 P.2d 769 (Colo. 1985).

Previous course of dealing considered in determining meaning of contract provisions. It is the policy of the uniform commercial code to consider previous course of dealing in determining the meaning of contract provisions. Amerine Nat'l Corp. v. Denver Feed Co., 493 F.2d 1275 (10th Cir. 1974).

After defendant was provided a copy of the manufacturer's statement and disclaimer of warranty, those items became part of the agreement between the parties. Graham Hydraulic v. Stewart & Stevenson, 797 P.2d 835 (Colo. App. 1990).

III. BUYER IN ORDINARY COURSE OF BUSINESS.

Homeowners who purchased materials kits from log home building firm were buyers in ordinary course of business and received title to materials when submaterialman made delivery and homeowners paid entrustee of goods. Lumber company, as submaterialman, has no ownership interest in or right to payment for materials delivered to homeowners. Schneider v. J. W. Metz Lumber Co., 715 P.2d 329 (Colo. 1986).

IV. CONSPICUOUS.

The term "conspicuous", as defined in subsection (10) of this section, is qualified by the provisions of § 4-2-316 (3). Richard O'Brien Cos. v. Challenge-Cook Bros., 672 F. Supp. 466 (D. Colo. 1987).

V. CREDITOR.

Applied in Am. Nat'l Bank v. Tina Marie Homes, Inc., 28 Colo. App. 477, 476 P.2d 573 (1970).

VI. DOCUMENTS OF TITLE.

Bean company's drafts addressed to a bailee and purporting to cover goods in the bailee's possession, which were tangible portions of an identified mass, were "documents of title" under this section, since they were treated as such both by the parties themselves and were customarily so used in the bean business in general. Midland Bean Co. v. Farmers State Bank, 37 Colo. App. 452, 552 P.2d 317 (1976).

VII. GENUINE.

Stock certificates issued with facsimile signatures of corporate president and secretary are "genuine" under § 4-8-101 et seq., though not countersigned by a transfer agent as required by § 7-4-108. Dempsey-Tegeler & Co. v. Otis Oil & Gas Corp., 293 F. Supp. 1383 (D. Colo. 1968).

Even though certificates are issued without authority, it cannot be said that facsimile signatures are either forged or counterfeit, and so, in that sense, they are effective against the issuer. Dempsey-Tegeler & Co. v. Otis Oil & Gas Corp., 293 F. Supp. 1383 (D. Colo. 1968).

VIII. GOOD FAITH.

"Good faith" standard is a subjective one. Under a subjective standard, an absence of knowledge is not equivalent to a lack of good faith. Money Mart Check Cashing Ctr., Inc. v. Epicycle Corp., 667 P.2d 1372 (Colo. 1983).

"Good faith" unaffected by payee's low account. In the case of a bank cashing a check, if the bank establishes that the check was taken without notice of dishonor or of any other defense, this is sufficient to establish "good faith". The issue of good faith, to establish that the bank is a holder in due course, is unaffected by the fact that the payee's account is low or overdrawn at the time the check is cashed. Vail Nat'l Bank v. J. Wheeler Constr. Corp., 669 P.2d 1038 (Colo. App. 1983).

Evidence of purchaser's lack of good faith. Knowledge that the holder of a subordinate security interest had not been given the notice required by § 4-9-504 might be evidence of a want of good faith on the part of a purchaser. Young v. Golden State Bank, 39 Colo. App. 45, 560 P.2d 855 (1977).

Broker's disregard of suspicious circumstances is evidence of bad faith. First Nat'l Bank v. Gilbert Marshall, 780 P.2d 73 (Colo. App. 1989).

IX. HOLDER.

Law reviews. For note, "Judicial Limitations on Holder in Due Course Claims", see 42 U. Colo. L. Rev. 439 (1971).

Applied in Cole v. Farner, 749 P.2d 970 (Colo. App. 1987); Barclay Receivables v. Mtn. Majesty, Ltd., 903 P.2d 37 (Colo. App. 1995).

X. PURCHASE.

Applied in Dempsey-Tegeler & Co. v. Otis Oil & Gas Corp., 293 F. Supp. 1383 (D. Colo. 1968).

XI. PURCHASER.

Definition encompasses lender taking security interest in goods. The definition of "purchase" and "purchaser", as set forth in the UCC, are sufficiently broad to encompass a lender who takes a security interest in goods as security for its loan. Guy Martin Buick, Inc. v. Colo. Springs Nat'l Bank, 184 Colo. 166, 519 P.2d 354 (1974).

Applied in Dempsey-Tegeler & Co. v. Otis Oil & Gas Corp., 293 F. Supp. 1383 (D. Colo. 1968).

XII. WRITTEN OR WRITING.

When parties to an oral contract agree that the oral contract shall be tape recorded, the contract is "reduced to tangible form" when it is placed on the tape. Ellis Canning Co. v. Bernstein, 348 F. Supp. 1212 (D. Colo. 1972).