Nonliability and limitation on liability of secured party — Liability of secondary obligor

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  1. (a) Unless a secured party knows that a person is a debtor or obligor, knows the identity of the person, and knows how to communicate with the person:

    1. (1) the secured party is not liable to the person, or to a secured party or lienholder that has filed a financing statement against the person, for failure to comply with this chapter; and

    2. (2) the secured party's failure to comply with this chapter does not affect the liability of the person for a deficiency.

  2. (b) A secured party is not liable because of its status as secured party:

    1. (1) to a person that is a debtor or obligor, unless the secured party knows:

      1. (A) that the person is a debtor or obligor;

      2. (B) the identity of the person; and

      3. (C) how to communicate with the person; or

    2. (2) to a secured party or lienholder that has filed a financing statement against a person, unless the secured party knows:

      1. (A) that the person is a debtor; and

      2. (B) the identity of the person.

  3. (c) A secured party is not liable to any person, and a person's liability for a deficiency is not affected, because of any act or omission arising out of the secured party's reasonable belief that a transaction is not a consumer-goods transaction or a consumer transaction or that goods are not consumer goods, if the secured party's belief is based on its reasonable reliance on:

    1. (1) a debtor's representation concerning the purpose for which collateral was to be used, acquired, or held; or

    2. (2) an obligor's representation concerning the purpose for which a secured obligation was incurred.

  4. (d) A secured party is not liable to any person under § 4-9-625(c)(2) for its failure to comply with § 4-9-616.

  5. (e) A secured party is not liable under § 4-9-625(c)(2) more than once with respect to any one (1) secured obligation.


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