By:  Harris                                            S.B. No. 505

                                A BILL TO BE ENTITLED

                                       AN ACT

 1-1     relating to the characterization of a transaction as a sale of

 1-2     accounts or chattel paper.

 1-3           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-4           SECTION 1.  Section 9.102, Business & Commerce Code, is

 1-5     amended by amending Subsection (a) and adding Subsection (d) to

 1-6     read as follows:

 1-7           (a)  Except as otherwise provided in Section 9.104 on

 1-8     excluded transactions, this chapter applies

 1-9                 (1)  to any transaction (regardless of its form) which

1-10     is intended to create a security interest in personal property or

1-11     fixtures including goods, documents, instruments, general

1-12     intangibles, chattel paper or accounts; and also

1-13                 (2)  to any sale of accounts or chattel paper, provided

1-14     that the application of this chapter to the sale of accounts or

1-15     chattel paper is not to recharacterize the sale of accounts or

1-16     chattel paper as a transaction to secure indebtedness but to

1-17     protect purchasers of accounts or chattel paper by providing a

1-18     notice filing system.

1-19           (d)  For all purposes, in the absence of a finding of fraud

1-20     or intentional misrepresentation, the parties' characterization of

1-21     a transaction as a sale of accounts or chattel paper shall be

1-22     conclusive that the transaction is a sale and is not a secured

1-23     transaction and that title, legal and equitable, has passed to the

 2-1     party characterized as the purchaser of the accounts or chattel

 2-2     paper, regardless of whether the secured party has any recourse

 2-3     against the debtor, whether the debtor is entitled to any surplus,

 2-4     or any other term of the parties' agreement.

 2-5           SECTION 2.  This Act takes effect September 1, 1997.

 2-6           SECTION 3.  The importance of this legislation and the

 2-7     crowded condition of the calendars in both houses create an

 2-8     emergency and an imperative public necessity that the

 2-9     constitutional rule requiring bills to be read on three several

2-10     days in each house be suspended, and this rule is hereby suspended.